Form 1098-T

[Questionguy101]

A college student received a Form 1098-T.

It has $3,000 in box 1 which is "Payments received for qualified tuition and related expenses".

It has $12,000 in box 5 which is "Scholarship or grants".

The student did not work in 2007 and has no other source of income.

So he has to report $9,000 ($12,000 - $3,000) of income on line 7 of Form 1040.

Is it correct?

[solomon]

No - assuming none of it is for room and board or for a service. See Sec. 117. The 3K should be available for one of the credits or tuition/fees to a qualified person.

[KBTS]

1098-t

In this case, I would have the client contact with the accounting department at school to get a printout of the actual amounts billed to them and paid by them. Colleges are notoriously bad at filling out the 1098-T - in fact, I had one today with a $0 in box 2 with nothing else listed, but a printout of the account showed over $15,000 paid by client.

Once you get the printout, then you need to see how much was actually paid for qualified tuition and fees and compare that to the amount listed as scholarships and grants. Hopefully, the printout will also show the details of any grants/scholarships applied. Once you have these figures, you can then determine if any of the scholarship money will by taxable income to the student.

[Kram BergGold]

Question guy

If the 1098- T is accurate then your analysis is correct. Howevedr I concur, check a print out to make sure it is accurate. The ones I am seeing so far this year are all wrong.

[Gretel]

Slightly disagree. Assuming form 1098-T is correct, student can use scholarships and grants to pay for materials and supplies and equipment, which would not be allowed for the credits, but are allowed to offset these funds.

[oceanlovin'ea]

Client came in with 1098-T for daughter today. Box 1 has $1168.20 and box 5 has $1007. So if I understand this correctly, I should ask what she used the $1007 for. If she used it for books and not tuition, it is not taxable. She can still take the education credit for the amount in box 1.

Is this correct?

Linda F

[Kram BergGold]

no

You either have to offset box 1 by box 5 or box 5 becomes income to to student.

[oceanlovin'ea]

Student didn't work

If the student didn't work or income was under filing requirement, there would be no need to file on the $1007 of scholarship money, would there?

Haven't had these for a few years and now have several clients with children in college. So I am just trying to get it straight in my mind.

Linda F

[Gretel]

I agree with you. No filing necessary.

[oceanlovin'ea]

she did have income

Okay she did have income, around $5400. So then I would add the scholarship money to her earned income, is that correct?

A couple of the above posts confused me. So I want to make sure.

If she used the money to buy books and not for tuition is that still the case that it is taxable?

Linda F

[Gretel]

Linda, if she used the otherwise taxable scholarship money to buy books or equipment, than this is not taxable. Whatever is left, no used for books etc. will need to be added to wages.