I’m an international student (RA already) who received a 1098-T this year. I noticed that Box 5 includes a health insurance remission, which I understand to be an employment-related benefit (not a scholarship or fellowship).
The issue seems to be that the school billed the health insurance through the tuition portal and later applied the remission as a credit — so it appeared in their system as a tuition-related offset. As a result, it was automatically reflected in Box 5 of the 1098-T, even though this remission is part of my employment benefits and not academic financial aid.
I have a job offer letter and employment classification showing clearly that this is job related aid.
I’m now trying to figure out the best path forward. Some options I’m considering:
Omitting the 1098-T entirely, since the actual qualified tuition and the true scholarships cancel out, and the rest is misclassified.
Reporting it and applying a tax treaty to exempt the amount federally (as I am eligible for one of them) — but that would treat the amount as taxable "fellowship" income, which isn’t accurate, and it creates a state tax liability (since my state does not honor federal treaties).
Manually removing the misclassified portion with a written explanation — but that likely requires paper filing and may slightly raise audit risk.
Requesting the school to reissue or revise the 1098-T, though I’m unsure if that’s even possible given how their systems process remission credits.
Has anyone dealt with a similar situation? Is it reasonable to omit the 1098-T in this case, or to subtract the misclassified amount with a note? Would appreciate insight on how best to resolve this while staying compliant and avoiding unnecessary state tax burden.
