College tuition scholarship showing as taxable income

Forum|Forum|3 years ago
March 4, 2023
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I graduated from a qualified college in 2022 and received a 1098-T form showing the Spring 2022 semester tuition scholarship. All of the scholarship was used to cover tuition. 1098-T Box 1 did not show any amount for qualified tuition and related expenses since the Spring 2022 semester was paid for in late 2021. The 2021 1098-T form did have Box 7 checked representing what was paid for the Spring 2022 semester.

On the TurboTax Student Information Worksheet, for some reason Part VI has $0 for Adjusted qualified expenses. As a result, TurboTax is showing the 1098-T scholarship amount is taxable income which is contrary to all the articles which state that scholarship grants are tax free when used at qualified colleges, full time student, working towards a 4-year college degree, first time college student, etc.

I would appreciate any assistance on figuring out what i am missing.

Thank you!

Hal_Al

Employee

Just don't enter the 1098-T, if you know none of it is taxable and/or you cannot claim a tuition credit.

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 2022 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.