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What tax form is issued for scholarships?

WantWhatsBestWantWhatsBest 98 replies11 threads Junior Member
I know we have a taxable scholarship because it’s being used for R&B. Is the 1098-T the only form a school provides, or should there be a 1099 I need to look out for? If it’s 1098-T, it’s not super clear where the scholarship is listed. It’s rolledup into another amount I think.

And since I’ve read multiple times that the 1098 T is used to figure tax credits and deductions, and I’m simply trying to report taxable portion of scholarship, my guess is that this amount is not officially singled out or reported in a separate box anywhere. And therefore I would just list it as imcome on the specified line, much like you would for cash tips if you are a waiter. Right?
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Replies to: What tax form is issued for scholarships?

  • Momma2018Momma2018 414 replies33 threads Member
    Scholarships paid directly to the school should be in box 5
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  • WantWhatsBestWantWhatsBest 98 replies11 threads Junior Member
    Box 1 shows payments received. Box 5 shows scholarships and grants. There is a difference between the two showing about $1100 more in scholarships received than the amount of payments received. Is this the taxable amount? Further, I can't figure out what this is referencing because there was nothing "extra" received. Everything was zeroed out on the bill. We were billed for X amount and credited with waivers/scholarships -- and the balance of Y was paid for by me. I'm really confounded by this. I called the school hoping they could help break this down for me, but they basically say they can't and turn it over to your tax professional. Which, by the way, I did and he asked me why I thought any part of the scholarship was taxable. Super confused.
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  • WantWhatsBestWantWhatsBest 98 replies11 threads Junior Member
    I forgot to add that the 1098 T amounts reflect fall 2018 and spring 2019. Further confusion. I really do not know what to report. I am tempted to just instruct tax person to include $1750 of scholarship as income (b/c it's being used for room and board -- it's marked that way on the bill and that's what it is) .. and call it a day. Basically, self-report the numbers versus relying on these forms which are beyond confounding to me.
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  • Momma2018Momma2018 414 replies33 threads Member
    I'm not sure. When was Spring semester due - maybe part of the payment was in 2019 and will show on next year's 1098? You are correct that the portion of scholarship for room and board is taxable.
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  • WantWhatsBestWantWhatsBest 98 replies11 threads Junior Member
    It was due January 5.
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  • patsmompatsmom 4215 replies508 threads Senior Member
    https://www.irs.gov/pub/irs-pdf/p970.pdf

    Everything you need to know is in here. Not exactly light reading but it's all there. @-)
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  • mommdcmommdc 11428 replies31 threads Senior Member
    edited February 9
    The 1098T is provided by the school to facilitate the claiming of education tax credits.

    A school is actually not required to provide the form if scholarships exceed qualified education expenses (tuition and qualified fees) received.

    The 1098T can be used to figure out taxable scholarships, but you can also use your own records.

    If your son had a scholarship specifically for room and board and received that scholarship in 2018, then just report that on his tax return.

    Tax software will ask about education expenses and you can fill in the box 1 and box 5 of the 1098T, then where it asks how much of scholarship was used to pay for room and board, put the $1,750.

    It will make that amount taxable then.
    He won't owe taxes on it unless his other income plus taxable scholarships is over $12,000.
    edited February 9
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  • BelknapPointBelknapPoint 4543 replies16 threads Senior Member
    You need to understand that the 1098-T issued by the college will not necessarily reflect what the actual tax situation is. There could be scholarships that would otherwise be non-taxable that the taxpayer chooses to make taxable for any number of reasons which the college is not aware of. You'll have to get all the figures and do your own accounting to determine how much, if any, of the scholarship money is taxable based on how you decided to allocate it.
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  • WantWhatsBestWantWhatsBest 98 replies11 threads Junior Member
    Yes, thanks very much for all this info. I forwarded that pdf in the link above to our tax person. He is the one who asked me why I thought the R&B scholarship was taxable and whether I got a form from the school saying so. That got my head spinning. I've sent all this great info off to him. Now it's in his hands to hopefully report properly.
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  • mommdcmommdc 11428 replies31 threads Senior Member
    You can do your son's tax return for free most likely with TurboTax Freedom edition online.
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  • mommdcmommdc 11428 replies31 threads Senior Member
    Show the tax preparer the part on the Publication 970 that deals with tax-free scholarships. It should say there that scholarships or grants used for room and board are taxable.

    Based on the 1098T he might say only $1,100 is taxable. But you are not claiming an education tax credit so I would just report the whole room and board scholarship of $1,750 as taxable for your son.

    His tax liability won't be affected by it.
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  • allyphoeallyphoe 2429 replies58 threads Senior Member
    If that's your son's only income, he has no filing requirement.
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  • WantWhatsBestWantWhatsBest 98 replies11 threads Junior Member
    @allyphoe -- he does have a bit of earned income and received a W2 for it. Very small amount of federal tax withheld -- so we're filing to get that back.

    @mommdc -- yep, it's the first thing I cited to him. Provided a link right on the IRS page showing scholarship used for R&B is taxable. Also sent him screen shot of the fall bill with the $1750 line item highlighted that says: scholarship/Room and board. I totally agree that this full amount should be reported. And we don't expect him to have any tax liability from it for 2018.

    I still can't figure out what accounts for the additional $1100 listed for scholarship/credits total versus payments on the 1098T. That's going to gnaw at me until I can hunt it down. His fees, out of state surcharge, and tuition were all essentially credited/waived. The balance was for R&B -- $1750 of which was credited from the scholarship. The balance was paid by us. There shouldn't be any additional anything showing up on the credits side of the ledger.
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  • twoinanddonetwoinanddone 23220 replies17 threads Senior Member
    Some of the fees might need to be included as taxable scholarship if they aren't QEE. insurance is one, transportation around campus (the buses or trolleys), some other things. It varies school by school because some schools itemize these fees while others lump them. That could be your $1100, especially if they have two semesters of non qualified fees on the same 1098.

    I kept everything separated by tax year. The school always had the billing for spring semester posted in Dec but never posted the grants and scholarships until Jan, so the 1098 wasn't correct. i used the billing and matched up all the scholarships and all the charges. It really was a lot easier for me to keep the tax years separate and just fill in the tax software manually. I think it asked if there was a 1098 and then it asks if the 1098 is correct and I answered NO! and then filled in my own numbers from the statement.

    My daughter had 5 or 6 charges: tuition, 2 fees, room (some years), board, and insurance. I added the tuition and 2 fees (plus added in her books and equipment) and that was the QEE. I then added up all her grants and scholarships (usually around 8 different items). Subtract and pay taxes on the difference. All in the same tax year.

    I'm sure your tax guy doesn't know because most people don't have this situation. Even here on CC it is not that common for students to have a full ride and therefore need to pay taxes on the non-QEE amount.
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  • mommdcmommdc 11428 replies31 threads Senior Member
    Was there a housing deposit paid? Some fees might be non qualified. You might never find out. But if you report more than the form suggests, then that shouldn't cause any problems. And you can prove it with the tuition statement.

    If he has only that scholarship and the W2 you could do his taxes on your own.
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  • dadof2ddadof2d 212 replies14 threads Junior Member
    edited February 9
    @WantsWhatsBest
    Box 1 doesn't show the total paid, it show the total QEE expenses that were paid. QEE does not include room and board.
    edited February 9
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  • WantWhatsBestWantWhatsBest 98 replies11 threads Junior Member
    Hm, interesting comments. Okay, so I'm looking at the fall bill right now. The fees charged: legal services fee; career services fee; arts fee; his program (his major) fee; the instructional fee (tuition). For the purposes of the education credits and deductions (none of which I qualify for), I can see how these might not be considered QEE. And I know that I paid for these separately. These fees are not covered under the tuition waiver except for the general fee and the instructional fee. For the purposes of my 529 withdrawal, however, these fees ARE considered QEE. (as far as I know, because they are considered a requirement to enroll) That's a separate issue, though.

    The 1098T reflects fall and spring. I am sure about that. I asked about it. If I add up those fees listed above (x 2 for 2 semesters) = it falls well short of the $1100 additional that's in the scholarships/grants/credits box. The housing deposit fee was refunded as part of the bill. So, I'm really just not sure what this $1100 is. I don't see why anything above that $`1750 marked for R/B would be taxable. Really confusing. I am going to hope our tax prep person can figure this out, because I sure can't. I'm going to call the school and see if I can get someone to break this down for me. When I called to ask about the 1098T last time, all they could tell me was that it included fall and spring and any other questions -- they said go talk to to your tax advisor.
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  • BelknapPointBelknapPoint 4543 replies16 threads Senior Member
    For the purposes of my 529 withdrawal, however, these fees ARE considered QEE. (as far as I know, because they are considered a requirement to enroll)

    Not necessarily. It's quite possible that a school is charging fees that are "a requirement to enroll" that are not considered QEE for a 529 distribution. The first thing that comes to mind is health insurance for the student that is billed by the college because the student does not have other eligible health insurance. This is not a 529 QEE.

    The 1098T reflects fall and spring.

    Reflects what for fall and spring? A 2018 1098-T, in box 1, should only show amounts that were actually paid in 2018, from any source, for qualified tuition and related expenses. Trying to equate an amount in box 1 with the numbers on a billing statement is a waste of time. Anyway, the numbers that a school puts on a 1098-T are notoriously inaccurate. Don't get yourself wrapped around the axle on what the school is reporting. Rely on your own numbers for how much was paid when and for what. That's what matters.
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  • mommdcmommdc 11428 replies31 threads Senior Member
    I think you are overthinking this.

    If none of the other scholarships or grants paid for nonqualified expenses (for the purpose of the determination of tax-free scholarships and education credits that is tuition, qualified fees and books), then they are not taxable.

    If the $1,750 was the only taxable scholarship, then report that.
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  • WantWhatsBestWantWhatsBest 98 replies11 threads Junior Member
    We didn't take health insurance through the school. The fees they are charging, even if not QEE for our 529 (though they do appear to be) are pretty minimal. We spent way more out of pocket than we used 529 funds for. So should be okay there.

    And yes, you all have made a convincing case for me to basically disregard the 1098T and just report what I know is taxable. $1750 R&B scholarship is the only scholarship he got. So that's what we'll report.

    Thanks!
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