After adding my 1098t the amount I owed in taxes increased by over $1000. As I understand it, I don't have to pay taxes on scholarship money, but TurboTax seems to be calculating it as if I did. How can I fix this?

[Patrice]

Your scholarship may or may not be taxable. Generally speaking, a scholarship or fellowship is tax free if you are a degree candidate and the award is used to pay for tuition and required fees, books, supplies and equipment, however there are some scholarship and fellowship opportunities that are not tax exempt. Any amounts used to pay for room and board and a stipend for living expenses is taxable. There are also a variety of coordination restrictions that are intended to ensure that you don't double-dip when taking advantage of the Education Tax Benefits.

If your grant/scholarship amount (box 5) is more than your tuition (box 1/box 2) then it because excess scholarship money that may be treated as taxable income on your return which will reduce your refund amount or even require you to pay income taxes. 

Relevant IRS Publication: 

• IRS Publication 970: Tax Benefits for Education

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