1098-T Health Insurance for Graduate Student - Teaching Assistant

Forum|Forum|4 years ago
April 11, 2022
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My son has school provided health insurance amounts included in 1098-T Box 5. The insurance is NOT included in the “qualified” expense amount in Box 1.

At my son's school, health insurance is mandatory & students and teaching assistants are auto enrolled in the plan, but may waive it. He’s not eligible anymore for the American Opportunity Tax Credit (AOTC) or other credits.

In IRS publication 970, health insurance is not listed in Chapter 1 as either a qualified education expense or as an expense that doesn't qualify. However, it is listed in the succeeding chapters regarding eligibility for credits such as with the AOTC as an expense that doesn't qualify. But, since he is not eligible for AOTC, that section seems like it is not relevant.

So, may he deduct the health insurance? If so, how is the deduction made (such as either adding it to Box 1 or subtracting it from Box 5?

Why is this situation ignored by the IRS and Turbo Tax for that matter?

Not A Product Question

JillS56

No, he may not deduct the health insurance. If the health insurance is reported in Box 5 it is because it is being paid by the university and is being considered as a scholarship/grant. The amount in Box 5 has to be deducted from the amount in Box 1.

The situation is not ignored by the IRS or TurboTax. It is addressed since TurboTax is going to deduct the amount in Box 5 from the amount in Box 1 and the net is what is available for either the AOTC or the Lifetime Learning Credit.

Student health insurance coverage is also not considered a qualified education expense in connection with the American Opportunity Tax Credit (AOTC) or the Lifetime Learning Credit. Qualified expenses are amounts paid for tuition, fees, and other related expense for an eligible student that are required for enrollment or attendance at an eligible educational institution. You must pay the expenses for an academic period* that starts during the tax year or the first three months of the next tax year.

Expenses that do NOT qualify as an Education Expense?

Room and Board.
Insurance.
Medical Expenses.
Transportation.
Personal Living or Family Expenses.
Education that involves sports, games, or hobbies.
Any non-credit course unless it is part of the student's degree program.

As I stated in a previous response, if you feel that this is wrongly reported in Box 5, then the university is the only one that can change the 1098-T.