topic Re: 1098 in Education

1098

dklem34 — Tue, 09 Feb 2021 16:15:29 GMT

I'm filing my taxes for my work but I also attend college. When I file my education info, it causes me to have to pay state taxes on my scholarships because I get more in scholarships than what I pay the college for. I really don't want to have to pay the taxes on the scholarships. Can I file without including my 1098 info? Or should I just not file at all. If I file with my 1098, I just end up owing more money than what I would get in return.

Re: 1098

KathrynG3 — Tue, 09 Feb 2021 16:35:31 GMT

It depends if you can be claimed as a dependent whether or not Form 1099-T must be included. However, amounts exceeding qualified education expenses are taxable.

Form 1098-T should be included if you are filing single and cannot be claimed as a dependent.

If you are a dependent, then you are not eligible for Education Credits. If your parent or guardians' meet the income limitations, they may be able to claim the education credit, instead.

For the most recent details regarding graduate student income, see: Are my scholarships, fellowships, or grants taxable?

Re: 1098

dklem34 — Tue, 09 Feb 2021 16:40:34 GMT

I am a dependent so as far as my personal taxes (I have a job), I can just file my W2 without my education info? Do my parents have to file the education info for the credits? I don't think they planned to, nor would they probably get much if any credits.

Re: 1098

Hal_Al — Tue, 09 Feb 2021 16:47:49 GMT

You are REQUIRED to report taxable scholarship. Scholarships that pay for qualified educational expenses (QEE - tuition, fees, books and other required course materials) are tax free. Anything over QEE (e.g. room & board) is taxable.

Typically, if box 5 of the 1098-T exceeds box 1, the difference is taxable income. So, no, you cannot ignore your 1098-T.

But you are not required to enter it. The 1098-T is only an informational document. The numbers on it are not required to be entered onto your tax return. However receipt of a 1098-T frequently means you are either eligible for a tuition credit or deduction or possibly the student has taxable scholarship income.

You claim the tuition credit, or report scholarship income, based on your own financial records, not the 1098-T. But, entering the 1098-T is the easiest way to do so.

There is even a loop hole available to claim a tuition credit, when your QEE are paid by scholarship. You treat more of your scholarship as income, to free up QEE for the credit.

For details, see: https://ttlc.intuit.com/community/college-education/discussion/yes-that-is-a-tax-loophole-available-but-you-can-not/01/715052#M19895

Re: 1098

Hal_Al — Tue, 09 Feb 2021 16:52:16 GMT

How much work income do you have? Any other income?

If you work income and scholarship income total less than $12,400, none of it will be taxed.

But, read the reference to the "loop hole". You almost assuredly want to report more taxable scholarship, so that your parents can claim a tuition credit.