Q. Does scholarship income need to be reported on a 1098-T?
A. No. But, using a 1098-T, with adjustments, is the best way to enter it in a tax software program, like TurboTax and others, to insure it goes to line 8r on Schedule 1, where it gets special treatment*. It appears that maybe FreeTax USA isn't programmed to handle it. or you just entered something wrong.
In TurboTax, you don't so much need a 1098-T, but you do need to enter the scholarship income in the Deductions and credits / educational expenses and scholarships section, rather than the income section.
* Scholarships are a hybrid between earned and unearned income. It is earned income for purposes of the $14,600 filing requirement (2024) and the dependent standard deduction calculation (earned income + $450). It is not earned income for the kiddie tax and other purposes (e.g. EIC). For grad students and post grad fellows, scholarship, stipend and fellowship income is earned income ("compensation") for IRA contributions.
Taxable scholarship goes on line 8r of Schedule 1.
