Form 1098-T Question

[MarkCTX]

I have a 1098-T where Box 5 "Scholaerships or grants" is greater than Box 2. Box 1 is blank. The detail provided to client indicates that the scholarship is Gift Aid. Seems to me this a wash. Some of the internet articles are interesting but conflicting.

Also, if Box 6 "Adjustments to Scholarships.. is a positive number. Is this figure always a reduction of prior year's amounts?

Thanks for any help.

Mark

[zeros]

Parents Don't Know Either.

Interesting how little the parents know about how much was paid. I suppose they don't keep tract of direct loans to the institution.

[Kram BergGold]

In a perfect world

For a start let's pretend that tuition is on a calendar year and not a school year. If the scholarship amount exceeded the tuition the difference would be income to the student.
If the amounts are on a school year then you need to line everythign up to determine how it fits. I would say that the item in box 6 reduces the amount of tuition eligible for credits in the prior year or in your case it could be extra income.

[FEDUKE404]

You gotta have the REAL numbers!

For a start let's pretend that tuition is on a calendar year and not a school year. If the scholarship amount exceeded the tuition the difference would be income to the student.
If the amounts are on a school year then you need to line everythign up to determine how it fits. I would say that the item in box 6 reduces the amount of tuition eligible for credits in the prior year or in your case it could be extra income.

As noted in numerous board posts on this topic, just about anything is possible.

On one hand, I've had 1098-Ts that showed two semesters of "billed" qualifying expenses and one semester of scholarship payments. And on the (later) flipside, NO qualifying expenses but scholarship payments.

Truth was the student had, more or less, the same (reasonably small) amount of taxable scholarship income for all eight semesters of undergrad schooling.

But the useless Form 1098-T never presented the underlying facts to reach that CORRECT conclusion. The tax person just needs to obtain the real numbers....whether for purposes of education credits or for determining any taxable scholarship income.

FE

[MarkCTX]

Good responses. As I read more articles I find where one school does not even issue a 1098-T if Box 5 exceeds Box 2. Also, some schools use a third party processor to employ whatever accounting rules seems appropriate. One school claimed the amount in Box 1 or Box 2 was a reflection of when amounts are recorded to the student's account, not when funds are received or deposited.

If the scholarship was "Gift Aid" how is that taxable? Gift is the responibilty of the donor.

Box 6 is positive number but it's a reduction of prior year's or prior years' (more than 1 year) activity.

Bottom line is no credit for current year. Box 6 may pose a problem in a prior year.

Thanks for everyone's help on this!

Mark