1098-T Tuition Paid in 2021 but Scholarship Posted in 2022

[mtnbryce]

In 2020, I made 3 tuition payments (Spring 2020, Fall 2020 and Spring 2021) and received 2 Scholarship payments (Spring 2020, Fall 2020) for my dependent daughter.  We were not eligible for Education Credits in 2020.  The 2020 1098T includes an "Ending Carry Forward of Un-Reported Charges Billed" amount.

In 2021, I made 2 tuition payments (Fall 2021, Spring 2022) and received 2 Scholarship payments (Spring 2021, Fall 2021).  We are eligible for Education Credits in 2021. The 2021 1098T includes an "Ending Carry Forward of Un-Reported Charges Billed" amount.

In 2022, I will make 1 tuition payment (Fall 2022) and receive 2 Scholarship payments (Spring 2022, Fall 2022).

When entering my 1098T information and Educational Expenses for 2021, how do I account for the offset between tuition payments made vs. scholarships received the following calendar year?  (Do I need to lower the expenses in Box 1 or increase the scholarships in Box 5 or neither)

How do I address the "Ending Carry Forward of Un-Reported Charges Billed" amount?

Any advice would be appreciated.  Thank you in advance.

[JillS56]

You do not have to do anything with the "Ending Carry Forward of Un-Reported Charges Billed" amount.  The general rule is that you can deduct (or use as the basis for a credit) on your income tax return those qualified educational expenses that you actually paid in that tax year, for attendance at an eligible educational institution during that tax year.  However, there is an exception (to allow for the way colleges actually register students for classes and issue bills) that you can deduct amounts paid in a tax year, for an academic period beginning in the first three months of the next tax year.

The 1098-T you receive for 2022 should provide for the Spring and Fall 2022 semesters.  

[mtnbryce]

Thank you for the reply and information.

Regarding entering the 1098T data into Turbotax for 2021, do I need to adjust Box 1 or Box 5 and how do I answer the Education Expense section question "Did Student's Aid Include Amounts Not Awarded for 2021 Expenses"? (Since technically I have scholarships for Spring 2021 and Fall 2021 but payments for Fall 2021 and Spring 2022)

Likewise, for 2022, will I need to adjust the 1098T data for these three areas to account for the fact that the 2022 1098T will appear to have double scholarships (Spring 2022 and Fall 2022 semesters) but only one payment (Fall 2022 semester)?

Thank you for your assistance.

[RaifH · Accepted solution]

You can reduce the Box 1 Tuition amount by the amount of scholarship you received in 2022 for the spring 2022 semester. Report the scholarship as indicated on Form 1098-T.

In the scholarship questionnaire, you will come to a screen Did the aid include amounts not awarded for 2021 expenses? Answer Yes and enter the amount of scholarship you received in 2021 for the spring 2021 semester that you paid the tuition for in 2020.

This will appropriately line up the scholarship credit with the year that you paid the tuition expense.  

In 2022, you will only have to report the scholarship received in 2022 for expenses paid in 2021. You will not have to reduce the tuition expense reported. 

[mtnbryce]

Thank you for this very clear explanation!