1098T and Box5 is bigger the Box1.

Forum|Forum|4 years ago
February 1, 2022
2 replies
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I graduated last year(2021) may and I got 2021 1098-T form from school.

Box 1 is empty and Box 5 is about 15k. All of the scholarship was for tuition expenses (not room or food, etc)..and it automatically reduced tuition that I have to pay.

I understand that Box 1 is empty that because I paid tuition at the end of 2020.

However, should the scholarship be considered as income?

I didn't get actual money for that.. but I want to understand the situation..

Thank you

TurboTax Free Edition Online

RobertB4444

The first and most important question is whether you received an education deduction for 2020 for the tuition that you paid with this scholarship. Since the scholarship wasn't on the 1098-T from last year the TurboTax program would have tried to give you a large education credit. If you accepted that credit then you very well could be on the hook for paying taxes on this as income you received.

If you took an education credit last year then you have two choices -

You can amend the 2020 return and enter the scholarship received to reduce the education credit that you took then. If the addition of the scholarship reduces the education credit below what you received you will have to pay back the difference.

OR you can enter the $15000 into income for this year since it exceeds the amount of tuition and fees by that amount and you can pay taxes on it as income received this year.

If you didn't take an education credit last year for the tuition paid with this scholarship then you can enter the amount of tuition and fees paid with the scholarship into TurboTax to offset this scholarship and reduce the taxable amount to zero.

Here's an article on entering your 1098-T into TurboTax.

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Hal_Al

Employee

Box 1 is under stated and box 5 is over stated. The usual explanation is that the 2020 1098-T had it reversed; box 1 was overstated and box 5 understated. Verify that box 7 was checked on the 2020 1098-T.

The 1098-T is only an informational document. The numbers on it are not required to be entered onto your tax return. However receipt of a 1098-T frequently means you are either eligible for a tuition credit or deduction or possibly your student has taxable scholarship income.

If you claim the tuition credit, you do need to report that you got one or that you qualify for an exception (the TurboTax interview will handle this)

You claim the tuition credit, or report scholarship income, based on your own financial records, not the 1098-T. In the 1098-T screen, click on the link "What if this is not what I paid the school" underneath box 1. You will then be able to enter the actual amounts paid. You will also reach a screen that allows you to adjust the scholarship amount for "amounts not awarded for 2020 expenses".

Or if you find it easier, just change the numbers in boxes 1& 5 to what your records show. The 1098-T that you enter in TT is not sent to the IRS.