Tax Year Prior to 2020: Are you required to file your 1098-T form?

[16koganc]

So, although the grant/scholarships tell me that I would owe about $600 in taxes, you're saying I don't need to include the info; therefore, going back to my original $70 tax return amount. The above person said it is required to file this form IF (in my case) the amount of financial aid exceeds educational expenses; therefore, it counts as an income. I want to make sure the IRS isn't going to come after me.

[feasel]

The words qualified appears  and this can create some doubt. That said, if you are using the money for school related expenses (books, tuition, room/board, etc...This should be qualified use of funds, Unqualified would be a trip to Bermuda for a party and that will be taxed. Now, if you are concerned, you can call the IRS at tele 1-800-229-1040, early in the morning, and ask them a question about the 1098-T form and if you must submit it. You don't have to give them your name or any data. Just say that you are a new student and don't want more paperwork, so is it a requirement to submit it. The answer should be "no"....

Keep this in mind (quoted from NY CPA Association): "many colleges and universities prepare 1098-Ts incorrectly and report tuition and related expenses inconsistently". This means you should be careful to reconcile the 1098-T with your own financial records of what money you actually received and paid. When I was in grad school there was a good deal of hand-wringing and hair-pulling each year among the students as we tried to determine what relationship (if any) the 1098-T bore to the financial facts.

[feasel]

Let me add another item to my answer. A company is required to take taxes from your pay, as it is a requirement. If grants and scholarships were considered to be income than they would be taxed upfront.

The problem with laws/rules, in taxes or football, unless they are crystal clear they are subject to interpretation and misinterpretation.

You can also call your university and ask them if it is a requirement or an option to file a 1098-T....

[feasel]

I  would like to add an additional item. If you received more grants/money then you need for college payment then you should return the extra  money as this money would be viewed as unqualified. If the your college costs are going up and could be used next semester them you should talk to the financial aid office on properly applying the funds. The aid (scholarship and grants) need to be applied to qualified costs and an overage needs to be returned or properly applied in conjunction with the financial aid office. The filing of a 1098t deuction or not filing does not mean that you can avoid using the money for qualified college costs.

[16koganc]

feasel, i'm not sure if you're familiar with what how grants are determined. But no, this would not be the case due to the process of receiving a grant. Scholarships are different and are awarded to students and they can use it for how they please as in buying a laptop they needed for school (although laptops are necessarily required). Grants are VERY hard to qualify for and they are determined by the income of parents or yourself (if independent). Also grants are normally specific-- cal grant covers exact cost of tuition (it changes per college), and grants by the school cover various different aspects (e.g. school health insurance). Overall, it should never be the case that a student would receive more money than needed due to the process of qualifying for them in the first place. Keep in mind that living expenses are also apart of grant qualifications and account in for educational expenses (e.g. dorms). The estimated cost of educational expenses is based off the school's tuition and fees and living expenses in that given area. There are specific grants given to students like the chaffee grant for the living expense alone. The qualifications you speak of, do include others. Also, I'd add that turbo made a mistake in my tax return.

[maglib]

If your scholarships exceed your education expenses you must report the scholarship income that exceeds your cost of schooling.

[dual enrollment dilemma]

Intentionally failing to file an IRS Form 1098-T and to pay tax on the taxable portion of a scholarship is tax fraud. This will reduce the amount of the student's income tax refund, if any, or result in a tax bill that must be paid. The student may also be subjected to late fees and penalties, if appropriate. Unfortunately the information on how to properly proceed regarding high school students in early college programs or dual enrollment is murky. 

[salem515]

So if line 5 is greater than line 2 and it should considered as an income. where's the money? I didn't receive any cash from my scholarship.

[Loz88]

I am in the same boat. Box 1 is less then Box 5, nothing is in box 2, but the scholarship I have from my job only pays for books, fees, and tuition costs. Any remaining funds is sent back to my employer and added to their scholarship committee's account for the next's years round of recipients. I never see a penny of that scholarship. Do I still have to report my 1098-T and count this scholarship as income even though it is not? And if so, wouldn't that mean I am paying taxes on money that will be taxed again by the recipients after me or potentially already been taxed by the people before me? This is so confusing. Any advice? I am leaning towards not reporting this form since none if it was actually income for me.

[KurtL1]

You should not choose the election of not reporting the Form1098-T on your return. A copy has been transmitted to the IRS and they will eventually determine that is was not reported. You will then receive a letter asking for the taxes on the amount of scholarships and grants that exceed your tuition and fees.

You need to do the following steps:

1. What you need to do is first is to request a copy of the documentation from the school showing were they returned the amount to your employer.
2. You should change the amount on your return in Box 5 to the amount the school actually received toward your expenses.
3. You then need to write a statement, to be sent in with your return, explaining why you changed the amount in Box 5 of Form 1098-T. You should also include a copy of the document from the school to support your statement.

You will be required to mail in the return with your statement attached. Currently there is not a way to attach a statement with an e-filed tax return.

[Nikebell14]

Waiting to see response also about reporting 1098T form 

[LinaJ2020]

If you have not filed, to report a Form 1098-T in the program, here are the steps:

In TurboTax online,

• Sign in to your TurboTax account and select Pick up where you left off
• At the right upper corner, in the search box, type in "1098t" and Enter
• Select Jump to 1098t
• Follow prompts

@Nikebell14

[alyssapate00]

So if the amount in box 5 is higher than in box 1, but still less than a $650 difference it doesn't need to be reported?

[KrisD15]

Incorrect.

If Box 5 is higher than Box 1 it's income for the student UNLESS the student can apply other expenses to that amount, such as books and supplies. 

ALL income needs to be reported. 

Whether the income will be high enough to require you to file is a whole other question. 

[Thomes]

If line 5(scholarships, grants) is more than line 1(qualified tuition and fees payments received) then that is counted as income and must be reported.  However, if you have additional costs of books, supplies, or equipment that were required for attendance and they were not included in line 1 then you can claim those expenses and offset some of the difference.  In addition, line 1 includes qualified payments received for tuition and fees, so therefore any payments, scholarships, grants,etc. that went towards tuition and fees will show in line 1.  Keep in mind any scholarships, grants, etc. that are used to pay for room and board (dorm room, meal plan) are considered taxable and need to be included in your earned income.  I know this is very counter intuitive to many college students, because the last thing they need is a possible tax bill when they file taxes.  Many universities require students to live on campus and purchase a meal plan for atleast their first year, so therefore to consider room and board paid by scholarships, grants, etc. taxable income is insane due to universities requiring these costs of students and then uncle Sam turning around and making them pay taxes on this.  This issue badly needs to be addressed by Congress and irs.  If the building you work at requires you to park at the building and pay $500 to park at the building every year, but your employer who is housed in that building pays the $500 for each employee to park there, why would it be fair that you have to pay tax on the $500 your employer paid for your parking permit. The 1098T is to determine eligibility for education credits for parents and non-dependent students.  My child has a tax bill due because she worked hard for scholarships and received more money than her qualified tuition and fees.  Unfortunately the difference between line 5 and line 1 is taxable income.