1098-T lowered refund

Forum|Forum|2 years ago
February 3, 2024
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My son is a freshman in college. Turbo tax had him planned for a $250 Michigan refund. As soon as I put in his 1098-T, he now owes Michigan $250. Box 1 of "payments received for qualified tuition and related expenses" was almost $12,000 and box 5 has a scholarship amount of $8000. So his scholarships did not exceed his qualified payments. Why would this lower his federal return and also cost him $500 to the state of Michigan? (Turbotax also prompted us to fill out a form 8615)

nicknowak-icloudAuthor

Edit: I had the numbers a bit wrong: Adding his $8000 scholarship into box 5 of the 1098-T lowers his federal return by $144 and makes his Michigan refund of $69 into owing the state $259.

KrisD15

To clarify,

Are you saying that the 1098-T shows 12,000 in Box 1 and 8,000 in Box 5 with no adjustments in other boxes and the program is generating tax from that 1098-T?

What is listed on Schedule 1 line 8r?

Is the student a dependent?

Is the taxpayer claiming the student getting an education credit?

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nicknowak-icloudAuthor

Yes, the 1098-T shows $11,891 in box 1 and $8,000 in box 5. All other boxes are at zero. There is no amount listed on schedule 1 line 8r. The student is a dependent. My wife and I claim him and file jointly. I did not put in any 1098-T information in my taxes so I don't believe I'm getting a tax credit.