1098-t fellowship income and Roth IRA

[stressedgradstudent]

Hello,

I received a 1098-T from my school reporting my fellowship income as a graduate student. When I enter it in Turbotax online it is not counting it as income (not showing up on line 1 with SCH next to it) and I'm also getting a penalty for contributing to a Roth IRA, which shouldn't be happening. Last year I didn't have these issues and nothing changed this year. 

[bmatty]

I am having the same issue. It worked for 2021. When chatting with TurboTax, I was told this was an IT issue that would be resolved by the end of January, but it still has not been.

[MichaelG81]

Yes, for fellowship income reported on a 1098T, it isn't currently allowing ROTH IRA contributions. This is currently confirmed as an issue and is actively being resolved.‌

Click this link to sign-up for notifications for progress updates. Rest assured, TurboTax is working on this issue for our customers. It may erroneously attach a penalty on your contribution lowering your refund or increasing your tax due, and stating you have an excess contribution based on fellowship income. Once fixed you will be notified after signing up.

Lastly, thank you for your patience into this, and notifying us of your issues.

@stressedgradstudent 

@bmatty 

[pat789]

1098-T scholarship income was included in line 1 on previous years' 1040 form. For tax year 2022, it is reported in a new income category, box 8r, of Schedule 1. This seems to have caused TT not to recognize the income is qualified for IRA contribution, per GSSA (graduate student savings act) passed in 2019.

When will TT resolve this issue? Please help!

[AbrahamT]

You see, when you are entering your IRA contribution amount, you will get to this screen as follows

 

So as per the instructions, the only way you would be allowed the scholarship income to qualify and allow for the IRA contribution deduction is only if the taxable scholarship was for Graduate or Post-Doctoral studies. Once I enter the 6,000 into that box, then this is what consequently happens

 

It allows for the income to be recognized to allow for the IRA deduction.

Check this out and see if this works for you as well.

[pat789]

Thank you.