Okay so I’m in the middle of doing my taxes, I’ve been really struggling with money and Turbo Tax was saying I should get an estimated $600 back, which is amazing! I’d be able to pay off the rest of this semester’s tuition and books and have some money left over, I was ecstatic. But then I put in the 1098T form, which is my bill for school, how much I paid for tuition, all that jazz. Since I paid just under $500 out of pocket for tuition, and another $200 for books, I thought it’d increase my tax refund. But it deducted it. By a LOT.
I went from just under $600, to only $130. I don’t understand why. This doesn’t make sense to me. Last year, when all my school expenses were covered by a federal grant, I got $600 back in my tax refund. Now I’m actually PAYING for some of it and I’m getting screwed over. WHY??
If scholarships and grants are more than your QEE, you may be getting taxed on the difference, which would decrease your refund. But as allyphoe says, it’s hard to know without seeing exactly what you’re doing.
Do you receive a lot of financial aid? More than tuition? If so, some of it may be taxable. Are you a dependent of your parents?
You do not get a deduction for tuition and books directly, you have to do it through the AOTC (if you are a dependent or young student you may not be eligible) or another tax credit/deduction. You have to meet all the conditions of the credits/deductions.
Yes, if the tuition and fees amount on 1098T (box2 usually) is more than box 5 (scholarships and grants), then the difference can be claimed along with the books for AOTC. Are your parents claiming you on their tax return as a dependent? They would claim the AOTC on their taxes.
Was your income over $6,300? So your refund is from too much federal tax withheld?
@twoinanddone is right, you might have had more scholarships/grants than tuition expenses and were taxed on the taxable scholarship income.
Also you said that last year your school expenses were all covered by grant? So the tuition, fees and book expenses were all covered?
Did you get a refund in addition to this? Then you might not have reported that amount over tuition, fees and books as taxable scholarship/grant income. It might not have made a difference in your taxes, but if you had excess grant then you are supposed to report it as taxable income on your return, along with your work income.
Has Turbo Tax printed “SCH” to the left of the 1st line of the tax return, the W2 line (it’s line 7 on a regular Form 1040)? If so, then taxable scholarships are being included in your income. Be positive you really do have taxable scholarship income before submitting your return. It could be a data entry error on the education expenses screen.
You can call or chat with Turbo Tax Support and they will help you review your entries (no tax advice but they can walk you through to make sure you entered everything correctly.)