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

No, you don't have to report your 1098-T, not unless you want to claim an education credit.  However if your grant/scholarship amount (box 5) is more than your tuition (box 1/box 2) you may want to report it because excess scholarship money may be treated as taxable income on your return.

When you enter your 1098-T, we use this and other information to determine the educational benefits you may be eligible for on your tax return, such as the American Opportunity Credit, the Lifetime Learning Credit and the Tuition and Fees Deduction.

How do you qualify for the American Opportunity Credit or lifetime learning credit? And how do you know if you have received them before (because it asks). I am 21 undergrad student, and its asking me if someone else can claim as a dependent. Right now, I am independent. My parents will not claim me. Also, after I put the 1098-t, $600 of the federal was taken away do you know why? Many thanks

I don't understand the part that says, "you may want to report it" My box 5 is more than box 1/box 2, I entered my information and it reduced my tax return almost $800. So I may want to report it because it "may be treated as taxable income"? If I don't have to report it, and reporting it lowers my projected tax return, then why should I report it?

Secondly, if Box 5 being more than box 1 is what causes it to be taxable income then why tell people it does not have to be reported?

turbo are you not going to reply, I have the same question. My 1098t made me go from $70 return to $600 taxes owed.

I would add to double check before filing with another tax filer like H&R block. It resolved the problem I was seeing here.

I am having the same issue. After I reported the information from boxes 5 and 2 on my 1098-T, I went from having a refund to owing a lot of money. I'm going to check out H&R block.

I'd suggest going into person too. I went into person, with H&R block, and they're able to play with the qualifications to give you the most money back.

Technically if grants/scholarships are more than tuition and fees only, that amount is taxable, because it counts as income. Even though we get grants and scholarships for living expenses that our (and parent's) income don't make up for, it counts as income which is taxable.

However, if you claim American credit opportunity, it should fix this.

Online is a generator response. While someone in person can play around with the numbers and see if you can qualify elsewhere to give you the most amount back.

I am the same person as 16koganc (different ITUIT account).

Ok thank you for the response.

I don't like the answer that was initially provided to you.  If you have more money from scholarship or grants (box 5) than the amount payed/billed (box 1 or 2) to you then YES you have to report it.  It is considered income, and is therefore taxable. According to the IRS if the income is over $650 then it is considered taxable income, and it MUST be reported.  As a tax preparer I have seen the IRS come after clients for not filing a 1098-T when they had taxable income on it.
The only time you don't have to file it is if billable/amount paid (box 1 or 2) is more than your scholarship or grant money (box 5).  This is true because then you qualify for an education credit/deduction, and it's up to you to know whether or not you can use the credits/deductions you qualify for.

Thanks for clarifying.

What if my box 2 is empty because it was included in the amount for my 2017 1098-T form? Do I still need to report the grants?

No, you don't have to file a 1098-T form. Keep in mind that the form is for a DEDUCTION. Iff the law has not changed, you are not required to take a deduction.  I have also read the IRS 1098-T instructions and most of  it is geared to the University-related filing requirements for the students...

The only reason that Universities send out the form, to the students. is to ensure that the $ (numbers), that the University sends to the government, align with your deductions (should you wish to take them).

Please note the tax categories (buckets and associated calculations) on the 1098-t are such that grants and/or scholarships offset your payments. This means a Merit Scholar or a Student Athlete can see an increase in taxes if you submit the form.

For an average family , who are paying a large tuition bill, this deduction can be a blessing and for some it can be a curse. You can know when to holdem and when to foldem....   

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.

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.

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....

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.

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.

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

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. 

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.

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.

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.