How would I known whether: 's aid income amounts not awarded for 2025 expenses

[mister-broshar]

TT asks: "Was any of the scholarship income not designated to pay 2024 education expenses?" How would I know? It's hard to prove a negative. Who designates? Me, my kid, the school? TT also says: "Schools sometimes will not report education expenses and corresponding scholarship income on the same years' form 1098-T" So, the answer to the question is about something the school doesn't report? Huh? How do I know whether they didn't report something? Maybe they did report it, but I didn't get it. I assume the answer to the question is no, but I hate to answer a question that seems like nonsense. I clearly don't understand it.

[KrisD15]

What the program is warning you about is that the 1098-T issued by the school is confusing and sometimes misleading. 

It is best to print out the student's online account or statement (for this year and last) and compare.

School years cross calendar years. 

Taxes are based on calendar years.

Sometimes the school will bill in December for classes that start January of the following year.

That amount will be on the 1098-T Box 1.

Sometimes a scholarship paying a January class will post in December, when the school bills and that will be in Box 5 on the same 1098-T, 

but sometimes the scholarship doesn't post until January of the following year and will be in Box 5 of next years 1098-T.

So you could get a 2024 Form 1098-T with 10,000 in Box 1 and nothing in Box 5.

That would LOOK LIKE you paid 10,000 expenses with no financial help. 

That would tell the TurboTax program that you have 10,000 in expenses to apply towards a credit.

Then the next year a scholarship hits the school for 8,000. 

You get a 2025 Form 1098-T showing nothing in Box 1 and 8,000 in Box 5.

TurboTax has to assume you need to report 8,000 as taxable income. 

IRS Pub 970 is pretty easy to follow and has great examples. 

It would be worth looking over. 

In TurboTax, everything is entered into the program of the Taxpayer claiming the student.

If there is a credit, that person claims the credit.

If there is reportable income, the student claims the income. 

[Hal_Al · Accepted solution]

All that gobbledygook is there because it is common problem for the schools to not match up the scholarship disbursements and tuition payments by calendar/tax years.  The user needs a tool for sorting out, in TT, the 1098-T he received.*

Basically, you are expected to know if that is your situation or contact the school for clarification. Lacking that info, you can assume the 1098-T is correct. 

*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 possibly your student has taxable scholarship income. 

If you claim the tuition credit, you do need to report that you got one or that you qualify for an exception (the TurboTax interview will handle this)

You claim the tuition credit, or report scholarship income, based on your own financial records, not the 1098-T. In the 1098-T screen, click on the link "What if this is not what I paid the school" underneath box 1. You will then be able to enter the actual amounts paid. You will also reach a screen that allows you to adjust the scholarship amount for "amounts not awarded for 2024 expenses".

Or if you find it easier, just change the numbers in boxes 1& 5 to what your records show. The 1098-T that you enter in TT is not sent to the IRS.

*

[mister-broshar]

Thumb up to use of the word "gobbledygook" 🙂

[mister-broshar]

WRT "In TurboTax, everything is entered into the program of the Taxpayer claiming the student.

If there is a credit, that person claims the credit.

If there is reportable income, the student claims the income. "

Use of "program" confuses me. I think you mean what I'd call "filing" or maybe "return". 

Seems that the 3rd line contradicts the 1st.