How do I claim my out-of-pocket portion of my scholarship?

Forum|Forum|4 years ago
February 9, 2022
1 reply
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I have a scholarship where the program pays 80% of the tuition, my employer pays 10% and I pay the other 10% of the tuition along with 10% of textbooks. The handbook directly says "There are expenses that can be deducted on your taxes as educational expenses. You may claim your personal contribution to your tuition and books in this way."

My 1098-T's box 1 says $3,969 and box 8 is checked off as more than half-time student. Do I qualify for the AOTC and how do I claim the 10% of tuition I pay?

ErnieS0

To be eligible for American Opportunity Tax Credit (AOTC), you must:

Be pursuing a degree or other recognized education credential
Be enrolled at least half time for at least one academic period* beginning in the tax year
Not have finished the first four years of higher education at the beginning of the tax year
Not have claimed the AOTC or the former Hope credit for more than four tax years
Not have a felony drug conviction at the end of the tax year

American Opportunity Tax Credit

Enter your Form 1098-T and additional amount for books in the education section.

Type 1098-t in Search in the upper right
Click jump to 1098-t
Did [you] get a 1098-T from [your school] in 2020? Say Yes, then continue. Fill in the missing information.
After you enter your info, TurboTax will ask Did You Pay for Books or Materials to attend school? Say Yes and enter the amount you paid
On Did You Receive a Scholarship or Grant in 2021? say Yes and enter the amount paid by your employer unless the amount is reported on your W-2

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Smarti05Author

Where do I claim the portion that I paid for? My 10% portion + 10% of textbooks comes to a total of $516.05. Is this what I put in box 1 of the 1098-T question or when TurboTax asks if I paid for any books/materials even though tuition is included in the calculation? @ErnieS0

Hal_Al

Employee

Q. My 10% portion + 10% of textbooks comes to a total of $516.05. Is this what I put in box 1 of the 1098-T?

A. Yes, it's that simple. If you know the amount of money you can claim ($516), the simplest thing is to just change box 1 of the 1098-T to that number. Leave Box 5 blank. Do not enter anything about employer assistance. Otherwise you situation is messy and TT is not designed to handle it (you going to have to use a convoluted workaround).

The 1098-T is only an informational document. The numbers on it are not required to be entered onto your tax return. What you enter is not sent to the IRS with your tax return.

You can qualify for the AOTC ($516). But you are limited to claiming it 4 times while an undergrad. If you expect bigger bills in the before graduating you may want to save them. The max AOTC is $2500, based on $4000 tuition.