Stipends

[Vanessa]

My client received a 1098-T which had 7814.00 as the amount billed and 18,000.00 in box 5 as scholarships or grants. My question: Is the difference taxable scholarship money? She used the money for living expenses and travel while she was going to graduate school.

[joanmcq]

Yes, it's taxable money.

[taxmom34]

I would still like to look at the student account statement from the college. you can't take the amounts on 1098T as gospel.

[Burke]

Absolutely get the transcript of expenses and scholarships. Your title says "Stipend" but that is wholly different from a scholarship.

[mastertaxguy]

Might want to wait just a minute....

Yes, it's taxable money.

1. Three years ago we started asking taxpayers with 1098-T's on their return to get account transcripts from the college/university.
2. One of the two Big 10 schools in our state does issue a 1098-T with a very detailed accounting statement on the reverse site: it is very useful. (Other Big 10 school in our state does not provide such detail.)
3. We have found that in almost every case where the scholarship and grants box is greater than the tuition charged a detail accounting shows that the "grants and scholarships" included loans, or was for an earlier or later year, (that infamous box 7 stuff). Obviously, athletic or other full ride scholarships (room and board, etc) are different.
4. Usually we believe in "when in doubt RTFM" but the instructions for 1098-T box 5 (scholarships and grants) state:

Enter the total amount of any scholarships or grants that
you administered and processed during the calendar year
for the payment of the student's costs of attendance.
Scholarships and grants generally include all payments
received from 3rd parties (excluding family members and
loan proceeds). This includes payments received from
governmental and private entities such as the Department
of Veterans Affairs, the Department of Defense, civic, and
religious organizations, and nonprofit entities. However,
see Exceptions, earlier. [The exceptions are for non-credit courses, non resident alien students,
and students for which the institution has a separate third party billing arrangement like
an employer or a government entity and the like.]

5. For some reason, many if not all institutions include student loans.
6. This also means that in many cases, what might look like $1000.00 or so of actual out of pocket expense for education credits is often much more as loans are considered payment for tuition.
7. Stipends, which really should not be on the 1098-T (in our book) often are for compensation for something (maybe tutoring???).