1098-T and IRA

[MYgrad]

My box 1, qualified expense is less than box 5 scholarship or grant.  Can I buy IRA to offset the income?  When I try to contribute money in IRA, my federal tax go up.   Is this working?  Even if I try to contribute Roth IRA.

I am doing this on-line.

[AmyC]

A ROTH IRA will not lower your taxes, if is after tax income. A traditional IRA is pre-tax income and could lower your income, if you qualify.

You must have taxable earned income to qualify. Table 1-1 in Pub 590 states taxable non-tuition fellowship and stipend payments qualify along with wages, salaries, self-employment income.

[MYgrad]

Yes it states that  taxable non-tuition fellowship and stipend payments qualify along with wages, salaries, self-employment income. - for example box 1: $12000 and box 5: $20000.  Can I buy IRA for $6000 to lower my tax.  I tried doing that on turbo tax online, it increase my federal tax and not decreasing it.   Is something wrong with online turbo tax or I am not entering this correctly.

[KrisD15]

A scholarship COULD be contributed, but as stated earlier, it needs to be earned income and reported on a W-2. Some Fellowship Grants are reported on a W-2 and that would qualify. 

The scholarship listed in Box 5 on a 1098-T can be used towards your Earned Income Credit if you are otherwise eligible, but excess in Box 5 on your 1098-T can not be used to make a deductible IRA contribution. 

Excess (taxable) scholarship income is funny, sometimes it counts as earned Income and other times it doesn't. 

For an IRA contribution, it doesn't.  

"Yes it states that  taxable non-tuition fellowship and stipend payments qualify along with wages, salaries, self-employment income."

Those Fellowships and Stipends are reported on a W-2.  

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