scholarships

Forum|Forum|5 years ago
July 2, 2020
1 reply
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If total scholarships exceeds qualified tuition and fees, can a graduate student claim lifelong learning? Ex. more than $10,000 was paid to student loans at school #1, but at school #2, student received scholarships that exceeded tuition/fees by $10,000

Hal_Al

Employee

Simple answer: yes.

But more of the scholarship will be taxable.

Using an example: School 1 1098-T shows $5,000 in box 1 and 0 in box 5. School 2 shows $6000 in box 1 and $10,000 in box 5. You can claim the $5000 from School 1 for the Lifetime Learning Credit (LLC) and you must pay tax on the $4000 of excess scholarship from school 2.

Alternatively, you may claim the maximum $10,000 of expenses for the Lifetime Learning Credit (LLC) . But, you must then report $ 9000 (4000 + 5000) of taxable scholarship income.

Hal_Al

Employee

I just noticed that you say you paid more than $10,000 with student loans at school #1.

In that case, a better example would be: School 1 1098-T shows $11,000 in box 1 and 0 in box 5. School 2 shows $6000 in box 1 and $10,000 in box 5. You can claim up to $10, 000 from School 1 for the Lifetime Learning Credit. You can also claim you used $1000 of the school 2 scholarship to pay the rest of the expenses at school 1*, leaving only $3000 of the scholarship as taxable.

*You do not literally have to have done that. You just need to have paid qualified expenses in the same year that you received scholarships.