1098-T Taxable Income

[Breezy241]

I received my form last week and was pretty much anticipating a credit, but unfortunately, box 5 for scholarships and grants has a higher amount than box 1 (qualifying expenses) and I was told the difference would have to be added to my gross income and taxed. Box 1 is

$4,615 and box 5 is $6,172. However, I am unsure how to do this? Once I go through adding the form, will it automatically tell me what I owe and the $1,557 difference would be added to my gross? Or is there a specific place where I need to add this number? I'm not sure how else to go about this...unless there's a loophole where I can receive some money but also pay the tax.

Unrelated but would it also be easier to pay for the $40 deluxe version of Turbotax as well? The free version asks a lot of questions and I assumed the numbers would just do the work once I put the ein in but it doesn't.

[KrisD15]

Yes, you will need to upgrade to report the 1098-T, but if you know the amount you need to claim, you can enter that amount in TurboTax Free.

Please remember that if you are a dependent, the 1098-T is reported on the return of the person that is claiming you for a credit. Since you indicate that there will be reportable income, yes, you, the student must report the income. 

You may type   1098-T   into the search box and click the "Jump to" link. 

Once you enter the 1098-T into the TurboTax program, be sure to continue through the entire interview. You will be asked about additional expenses not listed on the 1098-T, such as books. 

I also strongly recommend you look over the 1098-T and your online school account. Make sure no numbers are crossing the calendar tax year. Sometimes a scholarship posts in one year for expenses incurred in a different year.  

If you are sure the 1098-T is correct, enter it into the TurboTax program and the program will figure the taxable income for you and post that amount on your tax return. 

If you decide to enter the 1098-T and have TurboTax do the math, and if you start in TurboTax Free Online, you will be prompted to upgrade. If using a Desktop CD, you will need at least Deluxe. 

OR - IF YOU KNOW THE AMOUNT YOU NEED TO CLAIM AS INCOME you can enter it following the steps below without entering the 1098-T. This can be done in TurboTax Free:

Click on Tax Home on the left side bar

Click on Wages & Income along the top

Click Review/Edit if needed

Scroll down and click Show more next to Less Common Income

Scroll down that list to the last option and click Start next to Miscellaneous Income

Scroll down to the last item on that list and click Start next to Other reportable income

In the Description box type   SCH

Next, enter the amount you must claim in the box next to your name

Click Continue and Done

The amount should show on Schedule 1 line 8 and flow to the 1040 line 1

[Breezy241]

Thank you for your response, can you explain what you mean by this phrase?

I also strongly recommend you look over the 1098-T and your online school account. Make sure no numbers are crossing the calendar tax year. Sometimes a scholarship posts in one year for expenses incurred in a different year.  

Are you saying that I need to look at my 2019 1098T? My tuition had to be paid by a certain deadline and if I couldn't pay it, I would be put on a 4 month payment plan that had to be finished up before the next semester rolled around or ended. I assumed everything reflected the semesters paid and given.

[KrisD15]

The 1098-T has been revised, so this should no longer happen, but at times the school reports it wrong. Schools were reporting what was billed, but now they need to report what was actually paid. 

Say the school bills for a winter class (starts in January 2021) in December 2020. You need to make sure that the school reports the payment in the year the payment was made. So if you pay (or the scholarship posts) in 2020, it should be in Box 1 of the 2020 1098-T. If you pay (or the scholarship posts) in 2021, it shouldn't be reported until they issue the 2021 1098-T next year.

[Breezy241]

Effective with the 2018 reporting year, Old Dominion University has changed the reporting method to Payments Received. Prior to 2018 the University only reported charges billed. This is what it says at the top.

So it took me a bit to understand what you mean but I looked at my 1098T in detail since it lists details of payments received, details of charges billed, and details of scholarships and grants. The billed details are in box 1, which is tuition, fees, etc. Box 5 is the scholarships and grants. Payments received are 9,187.00, which is grants, loans, etc, but that's not on my form, it's just listed on the bottom of the document.

So what does this mean? Everything looks okay on the form, unless I need to specifically go in and see the actual date of posting.

Also did you mean post in box 5? Because box 1 is qualifying tuition and expenses.

[KrisD15]

"The billed details are in box 1, which is tuition, fees, etc. Box 5 is the scholarships and grants. Payments received are 9,187.00, "

No, Box 1 is NOT billed items, it should be what the school was paid in the tax year. It should report what the school received in your account. Specifically it should report "Payments received for qualified tuition and related expenses". 

I am including several links below to add clarification. 

Does the 1098-T make sense to you? If you received more scholarships/Grants than tuition/fees, (in your case you say $1,557), does that make sense to you? Where did the $1,557 go?

Did it pay room and board or other living expenses? If yes, it's taxable. 

Did you use it for books and/or supplies? Probably not taxable. 

I suggest you look over your account so you understand what money was coming in and where it went. Scholarships/Grants used for education purposes are generally not taxable.

You might also use the education section in TurboTax and work through the interview questions so the software can help you determine the tax consequence.  

Please click here for IRS Pub 970  

IRS Information on filing 1098-T