<p>From what I can determine, the 1098-T is only used to help one figure out if they qualify for Hope Scholarship, Lifetime Learning Tax Credit and the Tuition and Fees Deductions. Correct? How do we use it (if at all) to determine how much of a scholarship award is taxable? </p>
<p>In our situation, we do not qualify at all for the Hope, Lifetime or any Tuition and Fees deductions. DS scholarships exceeded the total COA. However, we are liable to pay taxes on the portion of the scholarship that is non-qualifying (i.e., R&B). Is the 1098-T used to determine how much of the scholarship you pay taxes on? Or, do you simply just use Worksheet 1.1 in IRS pub 970, then input it into Line 7 on the 1040 or Line 1 of the 1040EZ?</p>
<p>DS got a 1098-T with the following numbers: Block 2, $30,132.00 Block 5, $53,063.00 and Block 6, $13,829.00.</p>
<p>Yes, the 1098T is used for doing the student's taxes as well as for the Hope and Lifetime learning. Like you I didn't qualify for either of them and I count my D as a dependent. However, I had her file taxes on her scholarship money as the rate is so much lower (about 10%).</p>
<p>I used the numbers in Boxes 2 & 5 in worksheet 1-1 of Pub 970 to determine the taxable amount. My D had zero in Box 6 as she's a freshman and didn't have anything from last year. Like your son, my D had a larger number amount in scholarships due to R & B and outside scholarships. I put the number in Box 5 into line 1 of the worksheet and the number in Box 2 on line 6. So, the taxable amount, on line 8 of the worksheet, I put on line 1 of her 1040EZ. She had some other qualified education expenses (books and lab fees), but we withdrew money from her 529 to cover those, so they can't be counted on her taxes (double dipping).</p>
<p>entomom, did the numbers from your Ds 1098-T make sense? In other words, was the difference between Boxes 2 & 5 approximately the cost of your Ds R&B? If so, then I would agree and use that number to add to her line 1 of her 1040EZ and gladly pay the tax on it. In our case, the difference between Boxes 2 & 5 is nearly $23,000 and I know his R&B didn't cost that much. I do know that the 1098-T is used when determining if you qualify for tax credits, Hope, Lifetime, etc., but I am not totally convinced of it's role in determining how much unqualified educational expense you have to pay tax on.</p>
<p>In our case yes, the amount in Box 5 added up to the amount of her institutional plus her outside scholarships. And Box 2 added up to the cost of tuition and registration fee. </p>
<p>There definitely seem to be institutional differences between how 1098Ts are handled, which doesn't make understanding them any easier. You may be right about their intended use for Hope and Lifetime rather than for figuring out taxable scholarship money. What I don't understand is if we're supposed to pay taxes on that money, why don't they provide us with the infomation in a straightforward manner? Oh yeah, it's taxes, nothing is straightforward :(!</p>
<p>This is not the first year that I have had to use 1098-T forms but this is the firts time that Box 7(which includes amounts for an academic period beginning Jan-March 2008)</p>
<p>Here is the question:
Box 2 is $2420
Box 5 is $864
as I indicated above Box 7 is checked but my child did not go to this school for the spring semester of 2008. This is a difference of $1556, but that is not exactly what I paid because she never started in the spring. Do I contact the school to find out the amount the spring semester would have cost, or do I use the difference as the qualified expenses? Like I said that Box 7 has never been checked on either one of my children's 1098-T forms and I have confused myself thoroughly.</p>