Scholarships & Form 1098-T

[deovolente96]

First child attending college in 2025. First time working with Form 1098-T.

Q1. Would "Residential Amenities Fee" be an qualified educational expense? (per the university it covers  utilities/water/trash/WiFi, but also access to campus resources like university police, wellness center)

Q2. Would "Orientation Fee" be a qualified educational expense? (required of all residential and commuter students)

Q3. Can we just use the number provided in Box 1 and Box 5 of Form 1098-T to find the taxable portion of scholarships & grants or do we need to calculate it ourselves? (Note: the university included room & board in their Box 1 total)

[DaveF1006 · Accepted solution]

Yes, here are the answers to your question.

1.  Residential Amenities fees are not eligible expenses. Eligible education expenses fall into a strict guideline that only allows tuition, mandatory enrollment fees (which are directly tied to taking classes) and Course materials (books, supplies, equipment) needed for coursework.
2. Orientation Fees are a gray area. According to IRS Publication 970 and the Instructions for Form 8863, qualified education expenses for the American Opportunity Tax Credit (AOTC) are defined as:"Tuition, fees, and other related expenses required for enrollment or attendance at an eligible educational institution."

So if ‌orientation fees are required for all students for enrollment or attendance purposes, then the fee is an educational expense that can be used for the credit.

For your third question, you will need to subtract the room and board portion of Box 1 and report the rest.  Leaving this in Box 1 will mean you are claiming an ineligible credit.