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Retirement tax questions
Hi Opus 17,
Thank you for your examples. I have 2 follow ups as below:
Part 1. I am not clear about the deal with the school. You said "stipend plus a scholarship.“ Do you mean the w2 earned is the "stipend," the" tuition” part is the scholarship"?
I don't know if the earnings on w2 had already subtracted from the tuition. For example, if earned $50,000 from working as a RA(hourly rate * hours worked), w2 showed $30,000, the other $20,000 had deducted before tax towards the tuition. So this situation is different from the Church example, no free money here.
The above are not exact numbers
Part 2. I just got an update that a 1098-T was sent by the school. Box 1 (payments received for tuition and expenses) say $50,000, box 5(scholarship or grants or grants), say $30,000.
After entering into theTurbo-tax software, it puts $30,000 on schedule 1 ( scholarship not reported on w-2) and 1040 as additional income. I thought scholarship is not taxable!!! Turbotax live helper could not understand this either.
When w2 earning is added to the scholarship amount in box5, the sum is more than the amount in Box 1 of the1098-T - about $30,000.
Very confusing! What's the relationship between the w2, box1 and box5 of the 1098T.
Please explain.
Thank you very much!