I have a special case where essentially my entire scholarship becomes refunded to me, how do i enter that as taxable income?

Forum|Forum|3 years ago
July 20, 2022
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So as the title says, I have an arrangement with a Third Party where they pay for my tuition before my scholarship releases, and in return my school refunds me essentially the entire scholarship back. However, due to this arrangement my 1098-T form doesn't show the correct amount of scholarship money that I have left over, and I'm afraid that my income from the refunded scholarship isn't calculated correctly. How do I Input the total refund amount that I received ($6601.81) onto my tax form, assuming it's all taxable? (it didn't go to room and board)

TurboTax Basic Online

Carl11_2

Employee

Depending on your arrangement and who/what this third party is, and why this third party is paying your tuition, it may not be the scholarship money that is taxable. It could be the third party income that is taxable. So you need to provide more details on who/what the third party is and why they are paying your tuition.

Hal_Al

Employee

After entering the 1098-T, in TurboTax (TT), you will be asked about other assistance (additional scholarships, employer reimbursement, VA benefits, etc.). After you enter that, TT will calculate the taxable portion of all your benefits. Do not duplicate benefits reported elsewhere (e.g. your W-2).

As @Carl11_2 said, provide more info, for more specific advice. You (or your parents, if you're a dependent) may still be able to claim a tuition credit by making more of your scholarship/assistance taxable. That takes using a workaround in TT.

Hal_Al

Employee

Enter the payments from Vocational Rehabilitation as "additional scholarships", in TT. TT will subtract qualified expenses from the total scholarship amount and treat the difference as taxable income. It will be added to line 1 of form 1040, with an SCH notation (and the taxable scholarship amount) on the dotted line, to the left of line 1.