I am a graduate student with a 1098-t that reports $13,169.76 in box 1 and $16,889.71 in box 5. The extra $3719.95 is the exact amount that graduate student health insurance costs. While the health care is not "mandatory" I also cannot opt out of the health insurance and instead pocked that $3719.95. As such, it seems that when I enter my 1098-t it lowers my refund quite a bit, considering that $3719.95 that I cannot otherwise obtain as taxable income.
Are graduate students liable for the tax on this health insurance cost? Or can we omit the 1098-t in this case?
Thanks for any help you can provide on this matter!
Yes, healthcare is not considered an education expense, so the amount of the scholarship that paid for that will need to be claimed as income, or, if the scholarship is not restricted, it can be applied to any other out-of-pocket expenses you may have had, such as books and/or supplies.
You can report the $3719.95 as medical expenses and it might be deducted on Schedule A (if applicable).
According to the IRS:
“Qualified education expenses don't include amounts paid for:
Medical expenses (including student health fees);
Room and board;
Similar personal, living, or family expenses.
This is true even if the amount must be paid to the institution as a condition of enrollment or attendance.”