Box 1 1098-T Undervalued

Forum|Forum|4 years ago
March 3, 2022
2 replies
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Tuition for one semester at my university is $21,000. Adding on related expenses brings the semester total to $21,623.00. I was billed for that amount in December 2020.

My 2021 1098-T Box 1 shows payments received = 107.50. Box 5 shows scholarship/grant total of $21,622.50.

The scholarship/grant portion is is made up of mainly tuition remission, with a small loan, a small scholarship, and a small grant.

When I enter this information into turbo tax, turbo tax is treating the excess (21,623 - 108) has earned income and making it so that I owe a lot of taxes.

A turbo tax expert has stated that Box 1 is incorrect and I need to get in touch with my school. I got in touch with the manager of financial services at my school who walked through all of the boxes on my account with me and triple checked that box 1 is correct. The manager of financial services at my school told me just to not file the 1098-T if it does not work in my favor. What do I do? It seems that box 1 is wrong since the school obviously received more than $108, but the manager of financial services insists that everything is correct and I should just not file if it does not work in my favor. Any help is appreciated!

Hal_Al

Employee

The manager of financial services at your school is correct, just don't file the 1098-T, if it doesn't affect your tax return.

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 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 2021 expenses".

rob135Author

Hi Hal! Quick follow-up question for you. And thanks very much for your help.

When you said "just don't file the 1098-T, if it doesn't affect your tax return. " Im a little confused because in my case, the 1098-T does affect my tax return, just in a negative way. Since box 5 is greater than box 1, it increases my tax burden from net 500 to needing to pay 2,000. And I've often seen online that if box 5 is greater than box 1 it needs to be filed and treated as income. Were the things that I read just outdated?
Again, thanks so much for your help @Hal_Al

Hal_Al

Employee

Just don't file the 1098-T, if the facts doesn't affect your tax return. You're not bound by the numbers on an erroneous 1098-T.

If the correct numbers do affect your return, then you need to adjust the 1098-t when you enter it with the tools TurboTax provides. Or, for simplicity, just enter the correct numbers when you enter the 1098-T. What you enter is not sent to the IRS.

ThomasM125

You should enter the actual tuition paid during 2021 if it differs from what is reported on the form 1098. You will see an option for this below the box 1 entry for 1098-T in TurboTax by clicking on the highlighted link that says What if this is not what was paid for to this school?

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