1099t

Forum|Forum|5 years ago
February 12, 2021
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box1 is $7000 box5 is $5000, why scholarship box5 is more than qualified expensebox1 we also paid for books extra

linaj20201

Based on your information, it shows your scholarship amount ( box $5,000) is less than your tuition amount ( $7,000) It seems like you should qualify for an education tax break for the difference of $2,000 plus the extra books you paid for.

To enter your Form 1098-T in the program, here are the steps:

Sign in to your account, select Pick up where you left off
At the right upper corner, in the search box, type in "1098t" and Enter
Select Jump to 1098t
Follow prompts

If you received a scholarship that fully covers your qualified education expenses, it is like a wash. You do not get any tax break. If your scholarship does not cover all of your education expenses, you may still claim either a credit or deduction on your tax return. However, if your scholarship exceeds your education expenses, the difference will be treated as wages added on line 1 of your Form 1040. If you meet certain requirements, you may qualify for an education tax break including the American Opportunity Tax Credit AOTC, Lifetime Learning Credit or Tuition & Fees deduction. To see if you qualify, here are the links:

Employee

There is a tax “loophole” available. The student reports all his scholarship, up to the amount needed to claim the American opportunity credit, as income on his return. That way, the parents (or himself, if he is not a dependent) can claim the tuition credit on their return. They can do this because that much tuition was no longer paid by "tax free" scholarship. You cannot do this if the school’s billing statement specifically shows the scholarships being applied to tuition or if the conditions of the grant are that it be used to pay for qualified expenses.

Using an example: Student has $10,000 in box 5 of the 1098-T and $8000 in box 1. At first glance he/she has $2000 of taxable income and nobody can claim the American opportunity credit. But if she reports $6000 as income on her return, the parents can claim $4000 of qualified expenses on their return.