<p>This is my first time filing income taxes and I am preparing them myself. There are a couple of things I am unsure of.</p>
<p>I received a 1098-T from my school. The amount of grants and loans (box 5) is more than the amounts billed for qualified tuition and related expenses (box 2). All of my funding comes from government grants and loans (CalGrant, Pell Grant, Direct Loans). </p>
<p>Do I have to report the extra grant/loan money I received, as income?</p>
<p>Because my financial aid covers more than my qualified tuition/expenses, does that mean I don't qualify for any educational tax breaks?</p>
<p>Hope someone can shed some light on this for me. I appreciate any help I can get. Thank you!</p>
<p>Does box 5 include grants and loans? If so I would subtract the loans from that amount first. You do not have to pay tax on any loans since that is money that you are paying the school. Then see if your grant amount (or any other free money) is greater than allowable expenses. Aloowable expenses includes books (which is not included on the 1098-T). If you are a dependent your parent can take a tax credit. You as a student are liable for any taxes on scholarships/free money in excess of allowable costs (tuition, manadatory fees, books).</p>
<p>Box 5 would not include loans. Only grants and scholarships.</p>
<p>OP: If the grants and scholarships you received can only be used for tuition, then no, you won’t get any tuition credits. But if some of the scholarships can be used for other things like room and board or books, then apply it to that first, any left over, apply to tuition. If there is still a taxable amount, then there would be nothing left for credits.</p>
<p>But if you can use some of ths scholarships for non qualified fees, and the rest of the scholarship doesn’t cover tuition, then the tuition can be used for a credit.</p>
<p>Be sure to put any taxable scholarships as earned income on your return. That will mean they qualify for the higher standard deduction and may mean you don’t end up with any taxable income.</p>
<p>Loans will not be taxable, and can be used for credits.</p>