Hi all,
I got both 1098-T and W-2 this year. I got 1098-T bec I was a graduate student at my school for the first half of the year, and I received scholarship to all expenses (books, supplies, apartment, grocery, utilities). I got W-2 bec I got a job after graduation in the second half of the year. On my 1098-T, box 1 amount is less than box 5 amount, the difference is more than $8,000.
I use FreeTaxUSA for filing. My question is that how to answer the question: "Do you want to allocate part of your Pell grants or scholarships to room and board or other noneducational expenses such as travel, research, or certain equipment?"
At first, I answered YES, and input the difference between box 5 and box 1. But when I was about to finish all steps, the filing system pops up an alert saying that "Since you're not taking the education credits you don't need to allocate these scholarships and include them in income."
What does this mean? I am indeed not taking the education credits, if I answered NO, it increases my federal tax return a LOT, what does it mean?
Thanks!
