My D’s 1098-T shows that her scholarship money exceeds allowable expenses. She also had a part-time job in 2014 and made close to 4k. All of this puts her over the $6100 tax threshold, so she has to pay taxes on the overage. However, the 1098-T form does not show what she paid for books which would add to her allowable expenses. Does she use the 1040EZ form and just include the extra scholarship money with her income or does she need to fill out a 1040A form instead because the income amount won’t match her w-2? If so, where does add the expenses for books that weren’t listed on the 1098-T?
Adding in the cost of books will reduce her owed taxes. The 1098-T numbers don’t match the actual amounts received when including other outside scholarships and doesn’t show her expenses for books purchased/rented online. If I enter different numbers than what is on the 1040T will her form get red-flagged at the IRS?
This is her first year using the 1098-T. In the past, D just filed using the free online EZ form. Can she not do that anymore?
You don’t have to use the 1098-T numbers. You can calculate your own numbers using the books, plus QEE, and then report the overage on her tax form. She can use either form, EZ or 1040A. The tax will be the same.
Yes, add required books and supplies to the billed amounts shown on the 1098T. Just have records such as bills, records of payments and receipts to back up the amounts you use. She can use the 1040EZ if otherwise qualified to do so.
Thank you! So do I enter the scholarship amount first followed by “SCH” and then the separate amount from her W2 or do I just add the W2 and taxable scholarship money together and put “SCH” followed by that total? I’m not sure what is meant by “adding it in the space to the left of line 1.” When doing the form online there’s only one spot to type in the amount.
Depends on how you’re doing it online. If you are using online software, if you print a copy you should see SCH xxxx to the left of the amount box for line 1. The software should put it there based on your answers to the education questions it asks.
If you are using the IRS free fillable forms direct entry application there is a spot to click and add SCH xxxx to the left of the amount box for line 1. I don’t know about how any other direct entry applications may work.
For the 1040EZ it should look like this(best I can do):
1 Wages, salaries, and tips. This should be shown in box 1 of your Form(s) W-2.
…Attach your Form(s) W-2…SCH 5000…1…8000
That would be if the taxable scholarship amount being reported is 5000 and there is 3000 of W-2 income.
In the space on the left, there’s room both for “SCH” and the scholarship amount. Then you put the total (scholarship plus earned income) on the line to the right.
I am using a Turbotax online EZ form. When I click to the right of line1, a box came up, but I couldn’t type in it. I found an override button in a drop-down box, so I clicked on that and was able to enter “SCH” and the amount on line one (to the left of where the w-2 info gets entered). However, the program is not recognizing the “SCH” and amount that I typed in. I have been messing with this for way more time than what should be spent filling out an EZ form! I have been on the phone with Turbotax and I still don’t have a way to get this done. I called Turbotax and someone walked me through the steps, but the only way to include the additional scholarship money with her income was to fill out the info for the 1098-T form and then add the additional scholarship money. By doing this, I think the form then booted me out of an EZ form and changed to a regular 1040. The guy from Turbotax said it didn’t matter though because the tax would be the same (obviously). So, I continued on.
Once I got to the end of the federal form, the program checked for errors. An error came up saying I had to add the parent’s SSN due to D’s unearned income (excess scholarship money??). The next box said I had to enter the parent’s taxable income from line 27 of our tax form. Once I did this, it increased D’s amount of tax owed by $400 additional dollars because it based her tax owed on our income. The only reason I can see why it did this was because D had unearned income (the overage on her scholarship money).
I just want to fill out an EZ form for D with her info and submit the dang thing, but I am running into problems. How can filling out an EZ form be this complicated??? I don’t know any other way to get that extra info into line 1 of the EZ form without filling out the info for the 1098-T. D should not have to pay an ADDITIONAL $400 on top of what she already will owe based on her parents’ earnings.
Is there a better way? How has everyone else done this so easily, yet I can’t figure it out? Should I just print an EZ form and submit it via snail mail? I pulled up the IRS EZ form that I can type on, but it won’t let me add the “SCH” and amount to the left of line 1.
How does one enter this info on the EZ form where the system recognizes the additional scholarship money?? I’m very frustrated at this point. I want to be honest and pay the tax on the extra scholarship money, but the online forms aren’t allowing me to do this in one easy step and when I take the long way, it adds $400 more to DD’s taxes!
She will be taxed for the unearned income at the parents’ rate, so it is correct if her unearned income was high enough not to be covered by the $6200 standard deduction.
Well, we started over AGAIN using a different free online tax company and it was easy-peasy. We added the additional scholarship money and it showed up to the left of line 1 just like IRS Pub 270 stated where the amount should go and her tax was $400 less than what was coming out on Turbotax! Never in my life have I spent that much time filing an EZ form! I’m glad that’s done. I’m not ever going to use Turbotax again for D’s taxes. Thanks to those who helped!
You want to tell us which online tax company made it easier . . . or are you just going to leave the rest of us to struggle through all this ourselves? :-/
We used freetaxUSA. Got the link from the IRS website where it lists the available free forms and free federal filing. I didn’t notice this earlier, but when I looked at her form after it printed, it actually generated a 1040 (not an EZ(, but all of the info is there, including the SCH info to the left of line 1. We could have printed a blank EZ and then filled it out by hand, but I just wanted to be done and did not want to deal with snail mail and writing a check. That’s what I would have resorted to though had this last attempt not worked.