1098 T

[bekzm]

A client has 2 college kids. One will graduate from one university in May. The other child is attending another university. His 1098-T in box 2 is 6912 BUT the scholarships exceed box 2 - 11075 which he will not get many scholarships next year or next semester due to just graduating from high school. The mother did the return on line and did not include any scholarships on the tax return. So since he is a seeking a degree - do we include the difference since the books are included in box 2. Mom said the rest is in savings for the rest of the years for college.
Help - so confused

[JG EA]

A client has 2 college kids. One will graduate from one university in May. The other child is attending another university. His 1098-T in box 2 is 6912 BUT the scholarships exceed box 2 - 11075 which he will not get many scholarships next year or next semester due to just graduating from high school. The mother did the return on line and did not include any scholarships on the tax return. So since he is a seeking a degree - do we include the difference since the books are included in box 2. Mom said the rest is in savings for the rest of the years for college.
Help - so confused

The mom did her son's return? If the scholarships are taxable then his return will need to be redone (if it makes a tax difference). Read TTB page 12-6. It will help to know what questions to ask about the scholarship and when it is taxable. Curious, did the mom want to take the 1098-T on her return?

[FEDUKE404]

Form 1098-T is a problem in most cases

The tax rules are clear, but (from experience) Forms 1098-T are virtual disasters.

Problem is two-fold:

1 - Schools generally report the "billed" and not the "paid" amounts for qualifying expenses. With the carryover for spring semester (2009), a 2008 form can include up to three semesters, as well as summer school.

2 - The time frame for "scholarships" is generally different, and frequently is on a 1/1 to 12/31 arrangement, which can conflict with #1 above.

My own college dearie received a Form 1098-T for 2008. Two equal scholarships were provided, and I paid all expenses during calendar year 2008. After much diligence, I was able to match the "expenses" numbers for fall 2008 and spring 2009. The "scholarship" amount was only for the fall semester (half of total amount received). An official at the school told me "he gets lots of questions!"

Bottom line: Trying to discern anything from the Form 1098-T alone is asking for trouble. The necessary facts just are not there in most cases! For an accurate tax return it is almost obligatory to get the billing statements and/or ask LOTS of questions.

FE