topic 1098-T Income? in Education

1098-T Income?

LSA2002 — Sun, 07 Mar 2021 21:13:33 GMT

My son - who is not a dependent - is getting his PhD in Chicago. He got his 1098-T for 2020 with box 1 filled for over $30K. All that money was spent on tuition - he got a free ride. It appears as though he's being taxed on the entire amount. He also gets a $20K stipend which he is correctly being taxed on. Between the 2; it's like he's made over $50K. Which I believe is incorrect. is there a way to have it so he's not taxed on the amount in the 1098-T form?
Thanks

Re: 1098-T Income?

DavidD66 — Sun, 07 Mar 2021 23:08:24 GMT

According to the IRS, certain conditions must be met for a scholarship or fellowship to be tax-free:

The student must be a degree candidate at an eligible educational institution
The scholarship or fellowship money is used for qualified expenses. This includes tuition and fees, books, and course- or degree-related costs (like supplies required for specific classes) but does not include other college-related costs such as room, board and travel.
The money does not represent wages for teaching or other work.

Box 1 of Form 1098-T reports "Payments received for qualified tuition and related expenses". Box 5 reports Scholarships or grants. I suggest you revisit the Education section, and make sure the Form 1098-T was entered correctly, and that the proper amount of scholarship money was applied towards payment of tuition and fees.

Re: 1098-T Income?

Hal_Al — Sun, 07 Mar 2021 23:42:34 GMT

@LSA2002 said " He got his 1098-T for 2020 with box 1 filled for over $30K. All that money was spent on tuition - he got a free ride"

You don't say what was in box 5.

Box 1 is the tuition and fees and box 5 is the scholarship amount. Th difference between box 5 and box 1 is the taxable amount (assuming box 5 is larger). It could be that box 5 also includes the $20K stipend. Some schools do it that way, others report the stipend separately.

Re: 1098-T Income?

LSA2002 — Thu, 11 Mar 2021 00:16:38 GMT

Thanks for the reply. So box 1 has $31K and box 5 has 35K. He received a W-2 for his stipend ($20K). So that was handled on a different form and area of the return. His AIG is listed as just over $55K, but shouldn't be just over $25K and that's what he's taxed at? I believe that's the point you are making.

Appreciate the assistance.

Re: 1098-T Income?

LSA2002 — Thu, 11 Mar 2021 00:17:21 GMT

I'll be checking again later tonight when I work on his return.

Appreciate the assistance.

Re: 1098-T Income?

AmyC — Thu, 11 Mar 2021 01:46:20 GMT

Yes, box 5 minus box 1 is basically the taxable portion of the 1098T. There must be an error in the data entry. You want to mark that the tuition is correct and add any additional expenses, books, etc that were required. Those expenses will reduce the taxable portion as well. It sounds like the expenses are not getting picked up. It sounds like actual tuition paid is zero was entered.

Re: 1098-T Income?

LSA2002 — Thu, 11 Mar 2021 03:46:11 GMT

Thanks...I will be taking another look at things and re-entering, editing, etc.