Question

Is NHSC scholarship tuition coverage (box 5 on 1098-T) considered "tax-free employer provided assistance"?

Forum|Forum|7 years ago
June 5, 2019
1 reply
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I am a National Health Service Corps scholarship recipient. On my 1098-T, box 5 contains the amount of tuition that was covered by the NHSC, which is supposed to be strictly tax-free. However, when I enter it on TurboTax, the amount in federal tax I owe sky-rockets. Can I consider this amount "tax free employer provided assistance" and mark it as such so it is not incorrectly taxed?

Note: I do still want to include my 1098-T when I file because I received the scholarship halfway through the year and would still like to deduct the tuition payments I made earlier in the year (box 1).

A

Ashby

Your scholarship is not taxable up to the amount that it covers qualified education expenses. If your Box 5 amount exceeds Box 1 plus any other qualified education expenses, it is taxable.

You will be eligible for education credits if your Box 1 number exceeds Box 5. I looked up the scholarship and included an attached image. If you are receiving a monthly stipend, that amount is taxable.

U

user2794Author

Thanks! My box 1 exceeds box 5, so it should not be taxable, but when I enter in the information from my 1098-T, it still counts my box 5 towards the federal tax I owe. That's why I'm wondering if I can mark the box 5 amount as "tax-free employer provided assistance" so it does not contribute to what I owe in federal taxes.
The stipend is indeed taxable, but that is included on a separate W-2.