Skipping 1098-T as a fully supported graduate student

[annaluo991020]

Hi, I am a full-time graduate student that is fully supported by my school through teaching assistant-ship. That is, my school pays my intution, admin fees, and health insurance. I just received my 1098-T, and I realized my tax return dropped significantly after I entered my 1098-T. After doing some research, I realized that is because my Box 1 is about $5000 less than my Box 5 because of fees and health insurance. But none of the money was used for room and board. They are solely health insurance and admin fees.

Isn't 1098-T supposed to help with my reduction, not harming it? So I wonder if I can exclude my 1098-T form. 

[Vanessa A]

No, you cannot exclude this and not always does your 1098-T help instead of harm.

Even though you did not get the money and use it for room and board, if it was used for expenses that are not qualified education expenses, it does become income and depending on how much other income you have, it can become taxable income. 

Health insurance is specifically excluded from being a qualified education expense.  Depending on the types of fees, you may be able to add them in with your other expenses in the spot after you enter other fees after you enter your 1098-T (including things like required laptops, books, activity fees, etc) to reduce your taxable scholarship amount. 

Expenses that do not qualify

Even if you pay the following expenses to enroll or attend the school, the following are not qualified education expenses:

• Room and board
• Insurance
• Medical expenses (including student health fees)
• Transportation
• Similar personal, living or family expenses