topic Re: Chapter 35 in Deductions & credits

Chapter 35

Dmg091 — Wed, 05 Mar 2025 20:31:49 GMT

My box 1 is larger than my box 5 on 1098-T, I received scholarships above the untaxable amount but it all went directly to the school for tuition. I also received the VA chapter 35. I keep getting an error at the end saying box 3 and 4 cannot exceed box 2c. Should I enter that I received VA benefits and the amount? If so, that is causing the error. Chapt. 35 does not need to be spent on tuition and is supposed to be untaxable. My other scholarships were paid directly to the school, but chpt. 35 went to me and then the school. Please and thank you for the guidance.

Re: Chapter 35

KrisD15 — Wed, 05 Mar 2025 21:38:44 GMT

I don't know what form you are referring to when you say box 3 and box 4 cannot exceed Box 2c.

However, if your VA benefits and your scholarships covered your tuition, there would be nothing to report.

If the Scholarship was more than tuition, you might have taxable income, but you say Box 1 is larger than Box 5, so that indicates no taxable scholarship.

VA benefits are never taxed, but you also can't use the tuition paid with Chapter 35 towards an education credit.

Some VA benefits, such as Basic Housing Allowance (BHA) are for room and board, but Chapter 35 is to be applied towards tuition.

In your situation, you needn't enter the 1098-T.

There is no taxable income.

There is no education credit.

IRS Pub 970 see page 8

Re: Chapter 35

Dmg091 — Wed, 05 Mar 2025 21:55:42 GMT

KrisD15,

Thank you for your quick response, this is extremely helpful. When you get errors through TT in the review section, it shows you your worksheet (I think this is the correct term). As you likely know, they are labeled with letters and numbers, in my situation these were the line items that were in error and related to one another. None the less, you fixed my problem!! I appreciate your directions. Best.