2024 1098-T: Box 5 includes Scholarship and Grants for 2025 Spring Semester

[Cleo-Autumn]

My daughter received her 1098-T form for 2024. Box 5 = $29,500 which includes $10,000 of her scholarship and grants for Spring 2025(disbursed in December 2024). Box 1= $28,500 because it only reflects 2024 Spring and Fall Semesters. Box 1 does not include the tuition and fees for Spring 2025. We paid  $10,000 Total for her tuition and fees (out-of-pocket payments + student loans) in 2024. The timing for which her Spring 2025 Scholarships and Grants was disbursed made it look like we never paid any tuition and fees for 2024. This also prohibits me from claiming the American Opportunity Credit. Please advice on what I should do so I can claim the credit.

[KrisD15]

You do need to compare the 1098-T to the student school statement.

School years cross calendar years which makes reporting confusing.

Are you sure you're reading the 1098-T correctly?

Was this the student's first year?

I ask because it seems like the 1098-T might have a lower number in Box 1 compared to Box 5 because the scholarship in Box 5 paid tuition billed in 2023. 

USUALLY Box 1 is what the school billed and received during the tax year. Box 1 almost always includes the following year classes. Please look at Box 7, if Box 7 is checked, then Box 1 on the 1098-T DOES include January 2025 fees. 

Box 5 (scholarships posted) USUALLY lags behind a year and posts on the next year's 1098-T.

If you had a 2023 1098-T (or earlier) please try to match the expenses with the scholarships. If the "inflated" Box 5 on your 2024 1098-T reflects classes that started January 2024 but were billed in 2023, you need to make sure those expenses were not used for a credit in 2023. 

Once you have it figured out, adjustments can be made on the 1098-T entry screen by using the link under Box 1 "What if this is not what I paid" 

Or by using the screen that asks "Was any of the scholarship/aid not for 2024 expenses?"

[Cleo-Autumn]

Thanks for your response!

My daughter is a sophomore. Her 2023 1098-T Box 1 amount is higher than Box 5. Box 1 only reflects Tuition and Fees made for 2023 Fall semester and Box 5 only reflects scholarships and grants receive for 2023 Fall semester. I was able to qualify to AOTC.

I asked her school about her 1098-T for 2024, they told me that Box 5 is higher because it includes scholarships and grants meant for Spring this year (2025). They said that it was included because they disbursed the funds early(December 2024). Box 7 was not checked because Box 1 does not include Tuition and Fees for Spring 2025.

I'm not sure not how I can claim the AOTC because Box 5 is higher than Box 1 and even though we made tuition and fees payments ($10,000) in 2024.

[AmyC · Accepted solution]

When you come to the screen that says not for 2024 expenses, select yes. You state the income for 2025 was included early, therefore, it can be subtracted. You still qualify for the AOTC. You will need to include the scholarship amount for 2025 taxes.