1098T and Scholarship

[denisecasper9]

I have a client, who works for a college and is awarded a scholarship as payment. His 1098T has more in scholarships than the amount in Box 1 for Payments thus making the difference taxable income. All income was used for tuition. Would I enter the full amount of tuition, as tuition and fees not on 1098T? Thus not making the scholarship taxable. Or would the scholarship be taxable. So confusion now that Box 2 is not being used.

[Dude]

Is this an undergrad? I thought only grad students got these types of scholarships. If a grad only life time can be considered.

[denisecasper9]

Yes, he is an undergrad, going to a community college. He does security work for them and they allow him to take classes for free. Putting the income under scholarships.

[Dude]

Never heard of that, but if the tuition is his "pay" then it is taxable and must be included in his income. .

[ATSMAN]

Yes, he is an undergrad, going to a community college. He does security work for them and they allow him to take classes for free. Putting the income under scholarships.

I have seen one T like that but the excess was to pay for Room and Board at the college that was not included in Box 1.

[TaxGuyBill]

The full amount of tuition paid (received by the school, any payments including scholarships) should be in Box 1.

If Box 1 is correct, yes, the amount of scholarships that is greater than tuition and fees (usually Box 1) would be taxable.

This should be less confusing now that Box 2 does not exist. Box 2 never meant anything for the tax return. You always needed to know that amount that the college was paid (Box 1).

[WICPA]

I just had one of these today. Box 1 $800. Box 5 $11,500. Taxpayer told me he paid the $800 and the rest of tuition was covered by scholarship. His transcript shows this as well so I called the University and was told Box 1 contains payments they received from either student or student loans. So the amount in Box 1 is allowed for credit and the scholarship is not taxable. Seems this new method of reporting can be as confusing as the old way. Wondering if IRS will be looking for income based on the way the 1098-T reads.

[Dude]

I just had one of these today. Box 1 $800. Box 5 $11,500. Taxpayer told me he paid the $800 and the rest of tuition was covered by scholarship. His transcript shows this as well so I called the University and was told Box 1 contains payments they received from either student or student loans. So the amount in Box 1 is allowed for credit and the scholarship is not taxable. Seems this new method of reporting can be as confusing as the old way. Wondering if IRS will be looking for income based on the way the 1098-T reads.

Yeah, but I would look at the $11,500 and see if I could claim $3200 as income (unless expressly prohibited by the scholarship) so that you get the max AOTC

[nwtaxlady]

I have one that the college isn't issuing a 1098-T because they did not receive any payments from the Student. Student gave me their login and password and so I check the account summary by term. The student has about $9K in grants and qualified tuition is only $5K so the student has taxable grants of about $4K. The 1098-T should have an amount in the box for grants and scholarships. But they are not generating a 1098-T in this case. How is anyone going to know that the student has taxable income?

[WICPA]

Yeah, but I would look at the $11,500 and see if I could claim $3200 as income (unless expressly prohibited by the scholarship) so that you get the max AOTC

Have done that before but no good in this case as taxpayer is beyond AOTC years and Income level too high(married) for any credits. My worry was he had taxable scholarship income.

[TaxGuyBill]

Seems this new method of reporting can be as confusing as the old way.

That is not a correct method of reporting. I suspect it may be from colleges that have been using Box 2 in the past, and now they have no idea what they are doing.

[Burke]

So we are back to ignoring the 1098T and going with a full transcript of charges and credits from the school to determine what the heck is going on.......

[Lion]

The more things change, the more things stay the same!