This spring I was a senior in college with my final semester paying ~$2,500 for tuition (1098T box 1) and receiving ~$12,000 in scholarships (1098T box 5). During the year I made ~$45,000 in income from a job. Based on my research, I believe I should be able to claim the entire scholarship as taxable income to take advantage of the education credit. However, the tax software I am using does not seem to work with this. I have put $9,500 as "Other income".
The software poses these questions and bolded are my answers:
You told us that you had $9,500 in Pell Grants and scholarships that weren't used to pay for tuition, books, or other qualified education expenses. Do NOT include this amount below.
Do you want to allocate part of [Name]'s Pell Grants or scholarships to room and board or other noneducational expenses such as travel, research, or certain equipment? Yes.
How much of the $12,000 [Name] received in Pell Grants and scholarships do you want to allocate to room and board or other noneducational expenses? $2,500
I believe I am inputting this correctly, but the software is giving me $0 for the education credit. Is this a software problem or am I doing something incorrect?
On an unrelated note, I have found out that I have not been claiming the scholarship as taxable income for the past 3.5 years. My father had been doing my taxes and was not aware that non-tuition scholarship money must be claimed as taxable. What is the best way to go about remedying this? My tax returns have been accepted each year just fine.
