My 1098-T scholarship gets taxed, but tuition was listed in the 2019 form

Forum|Forum|5 years ago
February 13, 2021
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My university charged my tuition expense in December 2019 for the spring semester when it was due, but the scholarship I received was applied in 2020. Let's say my 2020 Form 1098-T has Box 1 as $0 and Box 5 as $10,000. When I type in the form, my taxes go up because the $10,000 scholarship gets added as income (but the corresponding tuition appeared in the 2019 Form 1098-T Box 1). My tuition is more than the scholarship, so it should not be taxed if it had all been included in the same form.

In the Education summary section, under "Scholarships/Grants," there is a question that asks "Was any of the scholarship not designated to pay 2020 education expenses?" If I put in $10,000 here, it seems to solve the issue with the timing and the scholarship is no longer taxed.

I wanted to confirm if this is where the timing issue is addressed and that I am doing it right or if I should reach out to the school if needed? It does not seem to ask for any further information or documents, so I imagine that is all that needs to be done, but please let me know if there would be anything else left to do. Thanks!

TurboTax Deluxe Online

Best answer by Hal_Al

Yes, that is where the timing issue is addressed. You don't need to contact the schools (the stories of that frustration are endless here in the forum).

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 deduction 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 2020 expenses".

Hal_AlAnswer

Employee

Yes, that is where the timing issue is addressed. You don't need to contact the schools (the stories of that frustration are endless here in the forum).

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)

Hal_Al

Employee

Be sure you didn't claim more tuition credit, than allowed, on your 2019 tax return, because your 2019 box 5 had less scholarship than was actually applied to the box 1 amount.