Education assistance counts as income

Forum|Forum|2 years ago
February 23, 2024
1 reply
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When entering my Son's 1098-T I get the message "It turns out --'s Education Assistance counts as income" However his assistance was less than the cost of tuition and books, etc. and the other reasons given in the message do not apply.

All the similar posts I can find say to go back and make sure everything was filled out correctly. I've done that and even compared it step for step with 2022's return and I still get this error. Please see the attached pictures.

Any idea how I can fix it?

TurboTax Home & Biz Windows

Hal_Al

Employee

Typically this happens because TurboTax allocates the expenses ($2631 + 267 = $2898) to the tuition credit, allowing you to claim the American Opportunity Credit (AOC) on your tax return. That means there are no longer any qualified expenses left to allocate to the scholarship. What was tax free scholarship ($1789) is now taxable on the student's tax return.

If that is his only income, he will pay no tax. Technically, he doesn't even need to file a tax return. But you may want to have him file anyway to document the reporting of the scholarship income that allows your to claim the extra AOC. With those figures, the AOC is worth (up to) $1116 more than if he did not treat the scholarship as income.

Sam78Author

He did have enough income that he was required to file a return which he already did. I didn't think this would be an issue as last years numbers were similar and I did not get this error otherwise I would have had him wait to file the return. Is there a way to allocate the expenses to the scholarship so we don't have to mess with redoing his return?