1098-T, education

Forum|Forum|5 years ago
March 11, 2021
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I am working on a tax return for my full-time grad school daughter. My results from 2019 are starkly different from 2020. But, her situation has not changed. On the 2019 return, TurboTax used the 1098-T amount for scholarships and grants and added it to her W-2 to determine her total amount of wages and salaries. She had living expenses that were entered on the 2019 return. On the 2020 return, TurboTax used only the amount I designated for living expenses and added that to her W-2 to determine her wages and salaries. The difference is about $26,000! So, what is the correct use of the 1098-T to help determine wages and salaries? How do I make sure that I correctly use Turbotax to get the correct result? Help! Thank you.

ThomasM125

The excess of scholarship income over education expenses would be the amount added to your daughter's wages in box 1 on her form 1040. The scholarship income is reported in box 5 on your form 1098-T and the education expenses are reported in box 1. You may have other qualifying education expenses or scholarship income that is not reported on the form, but that is how it normally works.

So, subtract the amount in box 1 from the amount in box 5 on your form 1098-T and that should approximate what income is added to the wage income reported on box 1 on form 1040. You can view form 1040 while in the online version of TurboTax by using these menu tabs: