Why does my taxable scholarship/fellowship amount zero out?

I filled in the amount my school has on record for my fellowship/scholarship money which should be taxable ($6727.00).  However, after doing the rest of my taxes, that amount is zeroed out (by TurboTax) and I can't edit it (under other income).  I never received a 1099 for this amount but I want to report it to make sure it is recorded since it is taxable (not used for tuition or expenses).  

Just some other info about my return: I am married, just had a child in 2010 and since my wife and I are both grad students, we got education credit for tuition paid and our salary is low enough to qualify for the Earned Income Credit for having a child.  In fact, the amount that Turbo Tax says we will get back is quite a bit more than we paid in over the year, due to all of the credits (child & education).  Does this mean that fellowship becomes non-taxable?

Any ideas?
Thank you!
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    Only took me 4 days to figure this out:

    Under "Deductions & Credits" -> "Education Expenses" Enter all of the information that you have for a student (any 1098T forms, for example). Then under "Enter Education Assistance You Received" put in your taxable fellowship amount under "Fellowship" or "Scholarships/Grants NOT on a 1098-T" (IGNORE the "Explain this")

    Using this information Turbotax will automatically fill in the field "Taxable scholarships and Fellowships" with the correct amount.  

    Basically Turbotax calculated: "Taxable Scholarships" = "Fellowships (in the field described above" + 'any other education assistance' + "Scholarships on 1098-T" - "Tuition and other Expenses"

    Hope this helps; it worked for me.
    • I'm curious whether the answer chosen as "best answer" solves the problem. When I follow the directions and enter my fellowship onto the fellowship line, my "Scholarships Fellowships & Grants" amount reflects the addition. However, so does the Total Educational Expenses line, effectively causing a net zero change in how the fellowship affects my taxable earning.  Accordingly, my amount tax bill/Federal Refund number is unchanged.

      I'm wondering whether this fix posted by GradStudent12 actually fixes the problem experienced by SJK35.

      SJK's description of his tax situation also applies to me

      "Just some other info about my return: I am married, just had a child in 2010 and since my wife and I are both grad students, we got education credit for tuition paid and our salary is low enough to qualify for the Earned Income Credit for having a child."

      so it may be that the EITC overrides any change I might see in my bill.

      Is there someone out there who has completed the fix from GradStudent12's best answer and found their tax bill to change, reflecting that this spot effectively fixes the lack of TurboTax's accounting for taxable fellowship earnings?
    • Well, it worked for me, MattAtPitt.

      Are your educational expenses '0' or a positive number?

      For my fix to work, your educational expenses should amount to 0.  Then any additional money you earned from fellowships/scholarships, etc will be added to the "taxable fellowships" line.  

      Educational expenses shouldn't display as a negative number.
    • I appreciate the followup, GradStudent12....

      having read your comment, I double entered the fellowship as educational expenses and as taxable income. I'm all set now. Thanks very much for your clarification!
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    Your taxable scholarship should show under Less Common Income in the page listing of Income topics.  You should be able to choose 'Update' to see the screen showing the amount and who received the scholarship.  When viewing your return, it will show up on the 'Wages, Salaries & Tips Worksheet' on Line 13 and is added to your total income.

    It is possible that your deductions and credits have reduced your taxable income to $0 and given you refundable credits larger than you expected, but you should be able to see your entry for the scholarship on a worksheet.  Be sure to do the Federal Review and look over your return before efiling.
    • I am having the same problem and honestly it looks like an error in this software.  I've tried to enter these numbers over and over, but every time I enter my tuition and non-taxable scholarship the taxable income is set to zero and can no longer be edited.  Then, when I look at the federal review, it appears as though I never entered anything for taxable income ("you entered" is blank) and the "you're allowed" column is 0.  This can't be correct, can it?
    • I had the same issue.  It seems to me that when you mark that you were a student at least half time, it triggers something in the software to automatically pull the data from the "Education" section under deductions.  I'm tempted to just enter my own calculations in the 1098T section that would accurately reflect the taxable portion, but I'm concerned that if I do so, it will trigger an audit because it doesn't match what the school sent the IRS.

      As far as whether it "becomes non-taxable," I think it will still be taxable, and will likely reduce the amount you will be refunded.  You (and I) will need to figure out how to enter the data accurately.

      I received a 1098T, but it doesn't accurately reflect my situation because the billing cycles for my graduate school weren't in sync with the calendar year in which the semesters happened.  So, my "Qualified Expenses" are showing up much lower than they should be, and I paid taxes on part of the difference last year.
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    See Comment Below  (it won't let me delete this "answer" but it should be a "comment")
    • Julie561, I think you are right.  I was just going  back through my return and it seems to be an error (at least in wording if not in calculation).  The two places that I tried to enter my scholarship amount were under Less Common income --> Scholarships and under Deductions and Credits --> Education --> under the 1098-T entry.  

      In the first instance [Common income --> Scholarships] I entered the amount of my scholarship and then Turbotax zeroed it out (seemingly when I selected that I was a candidate for a degree at a valid institution - just like you wrote spl930).

      Then, when I entered the info from my 1098-T, there is a section that asks for Education Assistance Received.  There is an amount in the Scholarships/Grants on a 1098-T field (amount I entered).  In the field under that - Scholarships/Grants NOT on a 1098-T - the "Explain This" option says:
      "A scholarship or grant is generally money that pays for a student's undergraduate or graduate education.

      Enter scholarships and grants that were used to pay for tuition, fees, books, supplies, and equipment, and the student was required to pay the institution for these expenses."  It also says "This is not common."

      However, I didn't use this extra amount to pay for tuition, fees, books, supplies, and equipment.  Shouldn't it just ask for me to enter the amount NOT used for qualified education expenses?   

      Anyone else confused by this?
    • I am confused by this too.  I am a graduate student and received a stipend from a fellowship, which was used for room and board and therefore taxable (I had been paying quarterly estimated taxes).  However, I cannot enter this into the "Taxable Scholarships and Fellowships" portion under "Less Common Income".  This fellowship is not reflected in my W-2 or my 1098T.  When I enter all the numbers exactly as they appear on my W-2 and 1098T, Turbotax just zeros everything out and does not allow the field to be changed manually.  I understand that the software tries to do automatic calculations, but in this case it does not accurately my wages and income situation.  Can you override this function so that the taxable scholarships and fellowships can be accurately represented?  Thanks.
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    Clearly this is a bug in the program.  I seem to stumble across 1 every year.  So far I have always found a work-around.

    I worked around this one by going to forms and entering the information manually as follows:
    1) At the bottom left of the interview screen click on Show Forms.
    2) scroll down to line 13 Scholarship/fellowship income not on Form W-2.
    3) Right click on the place where the value should appear (I had a 0 here) and then select Data Source.
    4) In the pop-up box click on the link for Personal Worksheet (name) -- Student Info Worksheet -- Line 9.
    5) Line 9 is also wrong (shame on you Intuit) but scroll down to Part V - Education Assistance (Scholarships, Fellowships, Grants, etc.).
    6) in my case it was a fellowship so I double-clicked on line 2c Fellowships in the space where the value should be.
    7) In the Supporting Details pop-up you can enter the name of the fellowship and the amount.
    8) After entering the amount you must hit the return /enter key to get the amount to show up in the total line at the bottom right of the pop-up box.
    9) Click the Close button on the pop-up.  The amount now appears in Line 2c of Student Info Worksheet.
    10) Click Close Form button twice to get back to interview.
    • 2012 UPDATE ------------------------ (2011 taxes)

      For the online Freedom edition (http://turbotax.intuit.com/taxfreedom/) which I would suspect most students qualify for, I found a workaround. This worked for me because my school  uses the "amount billed" box 2 on the 1098-T and not the "amount paid" (box 1). I still need to doublecheck the tax form output to make sure this is kosher but it's a better place than I was before.

      From the home screen, go to "Federal Taxes" and then "Deductions & Credits".  Go to "Education Expenses".  Follow the prompts, and if you already entered 1098-T info, click "edit" for yourself on the "student summary for ed expenses" page, otherwise follow the directions till you get to the 1098-T page.
      make sure you select "received scholarship(s) or employer  provided assistance in 2011" when asked. Now when you're at the 1098-T page, either add or "Edit" your 1098-T.
      To reiterate, this worked for me (I think) because my school uses box 2 of the 1098-T and not box-1, hence when you continue out of the 1098-T it asks you to "verify amounts paid to ~xxx schoolname~"  This is the box where you should enter the amount that appears (copied from box 2 on 1098-T) minus the amount of taxable fellowships that you have. Now click "continue" and then "continue" again at the "About your 1098-T page which is just an FYI.  Now it will take you to "Your 1098-T Summary" BUT when you click "Done" it will take you to "Enter Any Additional Expenses",
      Now, because you said you paid less than was billed to the school, you should enter the difference (which if you've followed exactly is your taxable fellowship amount) in the "Tuition and Enrollment Fees not on a 1098-T". And then click "Continue" AND BINGO! "Enter Education Assistance You Received"  This is the page we  are all trying to access directly and I found no other way to access it.  Enter your taxable Fellowship amount in the "fellowships box".

      Now it will show you the total amount of scholarships given and your total expenses. Your taxable fellowship amount may be reduced by any mismatch between box 2 and box 5 on your 1098-T, and this will vary by how you are funded and etc.  Note however that education credits on this difference that you would normally receive, you are not calculated as eligible for by turbotax.  This increased my tax burden by about 40 dollars compared to if I simply entered my taxable fellowship as misc income.



      If you haven't made quarterly tax payments, then for federal my discrepency was <$1000 so no fees.  In my state, I  was going to be charged  a small fee for unpaid taxes ~$11.  I was able to "annualize" my income and tax witholding and reduce that fee to $2 (yay).
    • GradStudent12 -I have a quick question - I filled out my turbo tax the same way and it then showed the correct taxable amount on that screen - however, when i go to save and print my tax return - i dont see this amount (subtracting my total education expenses from my total scholar hip including my fellowship) anywhere on the final tax return form? the adjusted gross income only includes my W2's but not this additional money? (shouldnt it at least be added into the tuition statement for scholarships and grants, line 5 still only shows my tuition scholarship not my fellowship?)

       i can only get it included in taxable income if i put the amount under "less common income" but my refund varies GREATLY if i list it in less common income (i end up owing).  Is it still taking the fellowship into account if its not showing on the tax return? The Federal Refund amount changes so i feel like turbo tax is computing something -

      thanks in advance! im afraid to file wrong! and confused by how the refund changes so drastically based on where we list fellowship money
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    i think one way to do it (and i ran into the same issue as well) is by deleting forms. so, i went back to 'home' and selected 'delete a form' to remove the 1098-T form. somehow, that reset all of my scholarships, as well as my 1098-T scholarship information, so i could refill the form.
    • I'm having the same problem.  The amount of my taxable fellowship stays in tact until I get to the part with the 1098-T, and that's when it zeroes out my taxable fellowship.  I've looked through all of the forms and it doesn't seem to be coming up, and it's not listed as part of my taxable income.  

      I can't imagine my fellowship becoming non-taxable, since I was told on multiple occasions that I had to be sure to claim it on my tax return.  I've had taxes voluntarily withheld from the payments, and those taxes are reported on my W2, but I can't seem to find the right way to report the taxable fellowship.

      This is getting extremely frustrating...
    • Same problem here.

      I chatted the other day with a representative who said it looked like it was a bug in the system.  But, I haven't yet gotten a followup from TurboTax.

      If I delete my 1098T, I can edit the "taxable scholarships" amount.  However, once I add in the 1098T again, the taxable scholarship field is (once again) zeroed out and unable to be changed.
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