From 1098-T doesn't show qualified tution for fellowship I received for prior year

[MukeshJain]

Situation Summary

• In 2023, your university did not pay your fellowship on time.
• The fellowship was paid in 2024, and it appears on your 2024 Form 1098-T.
• Box 5 (scholarships/fellowships) shows an amount greater than Box 1 (qualified tuition).
• Part of the fellowship was used to cover 2023 qualified expenses, but the 1098-T doesn’t reflect that.

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When Box 5 exceeds Box 1, the IRS assumes the excess was used for non-qualified expenses (like room and board), making it taxable income. Since the fellowship was paid in 2024, the IRS treats it as income for that year—even if it was meant for 2023 tuition. How to address this?

[dmertz]

Unless you were never billed for this amount, it seems that the university mistakenly omitted from box 1 the amount in box-5.  If mistakenly omitted, you should request that the university issue a corrected Form 1098-T .  The IRS instructions for box 1 of Form 1098-T:

Box 1.  Payments Received for Qualified Tuition and Related Expenses

Enter the total amount of payments received for qualified tuition and related expenses from all sources during the calendar year.  The amount reported is the total amount of payments received less any reimbursements or refunds made during the calendar year that relate to the payments received for qualified tuition and related expenses during the same calendar year.  The amount reported is not reduced by scholarships and grants reported in box 5.  Include in this box the receipt of a payment of past-due qualified tuition or related expenses from a previous calendar year, but only if the educational institution previously billed the student for such amount(s).

[Hal_Al]

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.