<p>I am getting full financial aid covering tuition, room and board, and expenses. On the front of my form 1098-T it says $39,212. in box 2 for the amounts billed for tuition and qualified expenses. In box 5 it says $27,750. for scholarships or grants. On the back it breaks down the tuition and mandatory fees into $19,606. for fall semester and $19,606. for spring semester under the heading "charges to your account." Under "credits to your account" it lists the scholarships and grants amount of $27,750. again. It seems like this form lists the full amount billed for the year in box 2 and the money I received for fall semester only (in 2010) in box 5. </p>
<p>I know I need to pay taxes on the amount I received from work and scholarships not used for tuition, fees, and books that is in excess of $5700. Do I use the amounts reported on the front of the form which include tuition and fees for the whole year, but only the scholarships received in 2010 (which would mean I didn't owe any taxes since the tuition and fees are greater than the scholarships received) and report then the spring semester scholarships next year? Thank you for any help.</p>
<p>Your school chooses to report amounts billed in 2010 in box 2 rather than reporting amounts paid in 2010 in box 1. The key question is when were the 2nd semester charges paid, in 2010 or 2011? Is box 7 checked? Can you view on what dates the grants/scholarships were applied to your account in your schools online account billing system? I suspect they were applied in 2011 and what you need to report is the same or similiar to what you say the back shows. Are you saying your academic year grants/scholarships are $55,500?</p>
<p>Thanks for your help. Yes, box 7 is checked. I can’t view my account online, but I will try to find out when the amounts were applied today. My academic year grants/scholarships are $55,000. I guess you’re saying for 2010 I use the amount of scholarships I received in 2010 minus the amount of allowable expenses that were billed in 2010 to get the amount I need to report, and just ignore the amounts on the 1098-T if they don’t match up with these figures? Will it cause any problem with the IRS if these numbers are different? I never filed taxes before.</p>
<p>Okay, I found out that I was billed for both semesters in 2010 (spring semester was billed in December) and the spring semester scholarship money was disbursed in 2011. The school says I should just use the numbers on the 1098-T. In the end, I will pay taxes on it all, but owe no taxes this year. Does that sound right?</p>
<p>It doesn’t sound right to me. Throughout the tax code whether it be for medical expenses, property tax deductions etc., what matters is when things are paid, not when they are billed. If you look at publication 970, it only talks about 1098-Ts in conjunction with claiming the various education credits/deductions, but it makes it clear what matters for those are when things were paid, not when they were billed.</p>
<p>The fact that box 7 is checked tells the IRS that there are amounts in box 2 that may not have been paid until 2011.</p>
<p>It may be true that you will make up the taxes due next year, but another requirement of the IRS is timely payment of taxes, paying taxes when they are due, not later.</p>
<p>I’m not a tax professional, neither are the people at the school. You may want to call the IRS and ask, though you don’t always get the right answer there either.</p>
<p>You may want to consult a tax pro. Since you have such a large award, it may be that you also need to send in estimated tax payments 4 times a year so you don’t incur an underwithholding tax penalty.</p>
<p>Wow, this is complicated! I actually called the IRS and when I finally got someone, they didn’t know and said someone would get back to me within 15 days. I need to do this so I can do my CSS Profile. I can’t afford to hire a tax person, so I was hoping someone on here would know. Anyway, thanks for your help. If anyone else knows anything about this, please let me know.</p>