Box1 in 1098t includes Room&Board, box5 is slightly less than box1. Turbo Tax asked how much from box5 was used to pay R&B. Should I put 0 or actual amount?

[swong11]

My son's 1098t has box1 as $20k, where tuition is about $14k and others (including $5k Room and Board) is around $6k. He also received scholarship and Pell grants as listed in box5 as $19k. My questions are:

1) Turbo Tax asked how much of scholarship/grants is used for Room and Board. I believe TT doesn't know box1 included R&B, if I enter $5k, then it will tends to think I paid the balance of $6k of tuition out of my pocket, indeed I only paid $1k. If I enter "0", then I get my out of pocket amount right ($1k), but will miss to report the taxable income used to pay R&B. Or I should adjust the box1 value to reflect the accurate qualified expenses (tuition etc) by excluding R&B?

2) Does my son need to file Tax Return if he only had this $5k "income" for 2018?

[KrisD · Accepted solution]

I agree, I don't think Room and Board should be included in Box 1, but regardless, in order for TurboTax to make the proper calculations, room and board cannot be in Box 1. 

When you enter the 1098-T you can click the "What if this is not what I paid?" link under Box 1 on the 1098-T screen and adjust (to 15,000?)

If Box 5 reports 19,000, your student would need to report 4,000 as income. (4,000 as room and board, scholarships used for room and board is taxable to the student) 

If you report that 8,000 was used for room and board, (the student would need to claim 8,000 as taxable income) you would have 4,000 left to use as as education credit (if you are otherwise eligible).

If this is the student's ONLY income, the student would be under the filing requirement. (Scholarship income is not considered as "unearned".)

IRS PUB 970 has great examples of how you can allocate scholarships and expenses to get the best credit. 

CLICK HERE for IRS Pub 970 Tax Benefits for Education

FILING REQUIREMENTS FOR DEPENDENTS:

Single dependents—

Were you either age 65 or older or blind?

No. You must file a return if any of the following apply. 1. Your unearned income was more than $1,050. 2. Your earned income was more than $12,000. 3. Your gross income was more than the larger of— a. $1,050, or b. Your earned income (up to $11,650) plus $350.