Hello,
Would anyone mind posting the numbers for a 1098-T for a student who has the Presidential (and $2500 Engineering Scholarship if possible)?
Our DS has selected Alabama for next year and we’re trying to understand how UA populates this form and what it might mean for our taxes, the various tax credits and 529 plans.
It looks like boxes 1,2,5 & 7 are fairly generic for anyone earning the scholarship(s), but the University wouldn’t even try to answer this seemingly innocuous question.
The amounts in box 1 and 2 will vary depending on the specific courses and number of credits one takes as the base tuition rates only include up to16 credits per semester and course fees depend on which college is teaching the course.
I don’t have an old copy of my 1098-T handy, but a presidential scholar with the engineering scholarship would have around $27,450 written in box 5. Boxes 7 and 8 would be checked.
I seem to recall that UA only completes either box 1 or box 2, but not both. Do note that changes to the student’s spring semester schedule after December 31 which change the total amount owed will be reflected on the next year’s 1098-T as they occurred during a different tax year.
My understanding was that the Presidents scholarship wasn’t limited to 16 credits. I thought I asked about this specifically when we were in the scholarship office. Are you sure about that?
Thanks for the numbers.
20xx Box #2 = $25,551.50 and Box #5 = $35,002.95
20xx Box #2 = $26,963.00 and Box #5 = $36,500.00
Box #1 is blank in both years.
Box #2 includes tuition and fees, and as SEA_tide mentions, it will vary from year to year. Box #2 is also technically spanning two tax years (1 semester in 1 year and another semester in the subsequent year)…but UA bills so far in advance, that the spring bill is assessed and paid in the same tax year as the fall bill, so don’t get hung up on this…just report what the form tells you is the total ‘qualified tuition and related expenses’.
My son’s credits have ranged from 15 up to 19 per semester, and in each case, his 1098-T lists the entire tuition amount charged (i.e., >16 credit hours). So, SEA_tide is not saying that UA will not include anything over 16 credits in Box #2: they do! What he is saying is that you can’t just use the base tuition as stated on the website for your tax estimates…your Box #2 amount may (and probably will) vary from what UA uses as its ‘base’ scholarship amount.
Box #5 includes your UA scholarships, and any outside scholarships that were mailed/posted directly to the student’s account. It will not include any scholarship funds mailed/handed directly to your student. So, on your student’s taxes, if you use an online tax prep package, there will be a whole section/form relating to ‘un-earned’ income where any additional scholarships can be reported.
People have posted elsewhere that AL state does not tax additional scholarship $$$s.
My advice is to use an online tax prep program - it walks you thru things step by step. Last year there was quite a bit of confusion about the ‘un-earned income’ section of the tax code. This year is was far less confusing. We use HR Block online program to file.
I will also add that there are 3 additional pages to the 1098-T, which break down everything by semester and include a detailed listing of each fee charged by UA and each credit applied, by semester.
Keep in mind that you don’t pay taxes on scholarships for tuition, books or fees. So, really only about $500 of those two awards will be subject to taxes.
To add to the confusion, if you as Parent want to claim an Am Opportunity Tax Credit for dependent student, then the student would claim more of the scholarship as taxable income. Simplistic Example - please get professional tax help on this:
20xx Box #2 = $26,963.00 (tuition/fees) and Box #5 = $29,463 (all scholarships)
difference = 2500.00. This does not include books
Books = 1,500.00 (assume 10 class $100 each class. Assumes spring books purchased in December)
scholarship income = 1,000.00
the student can file a return for scholarship income of $1,000 PLUS $4,000 = 5,000. Assuming no other earnings, no tax is due.
The parent can state they paid for books / fees / etc = $4,000 and claim a credit.
My understanding is that this works because UA Presidential scholarship is the “value” of tuition and is not legally stated as tuition itself.
And remember, room and board are NOT permitted for the Tax Credit.