1098 T causing me to pay taxes

Forum|Forum|5 years ago
February 8, 2021
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I received my 1098-t for my 2020 academic year with Box 1 showing $9,808 and Box 5 showing $31,424. I paid for college using scholarships so box 1 should show equal to Box 5; however, due to how my college process payments the form looks as though I cashed in on +$20,000 and thus need to pay taxes on it. I don't have the estimated $4,000 needed to pay federal and state taxes on this money I never received. Below is the school's response:

"XX bills for Spring semester in November of the previous calendar year, so the charges for your last semester were included on your 2019 tax form. Since spring semester was the only semester you had in 2020, there were no new charges billed to the account in 2020. If you had any remaining unpaid QTRE from the prior calendar year, that amount does carry over into the next year. You had $9,808.13 leftover in 2019 that carried over into 2020, which is where that total comes from.

Unlike the timing of the posted charges, all financial aid disburses on the first day of classes. Therefore, the aid for spring did not post until January 2020. Additionally, it is common for Box 5 to be greater than Box 1 because the Scholarships box contains ALL scholarships received including those allocated for room/board/refunded, etc. Whereas the Payments box is capped by amounts paid towards QTRE only."

KrisD15

Look at your student account. Scholarships posted in 2020 that paid tuition billed in 2019 may be adjusted by using the screen that asks "Was any of the scholarship for expenses of another year?"

Be aware that if any of the expenses billed on the 2019 1098-T were used for an education credit on your 2019 return, and those same expenses were covered by a scholarship that posted in 2020, you may now need to recapture the credit you received on the 2019 tax year return.

Your school is incorrect. The IRS changed the reporting requirements in 2016 so that the school is to report WHAT WAS PAID in box 1, not what was billed.

If any of the scholarship paid for expenses other than Tuition, Fees and supplies, that amount is income for the student. If you used scholarships to pay room and board, that

amount IS reported as income.