<p>Our daughter is in her senior year and this year's 1098T was quite the surprise. Here's the history:
2007 box 1 $11k, box 5 $7.5k (fall semester)
2008 box 1 $22k, box 5 $15k (spring & fall semesters)
2009 box 1 $33k, box 5 $15k (???)
2010 box 1 $11k, box 5 $15k (???)</p>
<p>In 2009 the school billed us for 3 semester but only applied 2 semesters of the scholarship. In 2010, the school billed us for 1 semester and applied 2 semesters of the scholarship.</p>
<p>Yes, box 7 was checked in 2009 but my question is, shouldn't the school apply the scholarship equally? If they're going to play games with the billing shouldn't they play the same games with the scholarship? The tuition-scholarship delta in 2009 provided no tax benefit whatsoever and this year their little game is costing me $2500. </p>
<p>I spoke to people in the financial aid office and they were no help.</p>
<p>Do you report exactly what the school is putting on the 1098? Most people use actual, calendar year figures based on what was actually paid and received in the tax year, including books and required supplies that are never reflected on the 1098.</p>
<p>Yes, I report what is on the 1098T because I thought I had to. So I can actually report what was paid and dispersed (scholarship) based on the calendar year? Guess I thought what I reported had to match what they reported.</p>
<p>–The tuition-scholarship delta in 2009 provided no tax benefit whatsoever and this year their little game is costing me $2500.–</p>
<p>They are not playing any games. They often report for the the entire year plus the first semester of the new year, it looks like in your case, the 2009 tax year, if you are billed earlier.</p>
<p>It looks like your 2009 1098-T reflected three semesters of tuition and your 2010 1098-T – even though your daughter attended two semester that year-- reflected only one semester of tuition.</p>
<p>You need to just file for 2010 that you paid 22k in tuition, etc., because your 2009 total obviously includes the Spring 2010 tuition and fees. You are allowed to subtract that 2010 spring semester out of your 2009 1098-t and apply it to your 2010 taxes so that your numbers for 2010 tax year are 22k for tuition and 15k for scholarships and therefore get the credit again for the 2010 tax year.</p>
<p>If you took the American Opportunity Credit or the Hope Credit last year, you don’t even have to refile a corrected Form 1040X to make it right, since the biggest number you can put on the Form 8863 worksheet for those two credits is $4,000, which, I am assuming, yours show.</p>
<p>We just kept good documentation and reported what we actually paid.
This did not match the 1098T at one school son attended.
When he transferred to another, magically that school’s 1098 matched our actual paid amounts.</p>
<p>I do believe this is getting clearer… I have been posting similar questions myself since my daughter’s school put all tuition and fees for freshman year on the 1098 but only the half of dispersed aid.</p>
<p>Like the OP, I thought it safer to use the numbers the way they reported them because the 1098 is what they sent to the IRS. I also thought all would come out right in the end but after reading some of these threads I’m not so sure I will continue this into the future (it really made no difference freshman year because she did not work and one semester of non-qualified aid was not in excess of the $5700 limit that would require her to file.</p>
<p>It seems that FAFSA and IRS data bases are moving toward a more direct link, will the inaccuracy of some 1098’s cause problems in the future?</p>
<p>Not sure how others are approaching this but I’m trying to maximize my tax deductions as a parent. My kids don’t need tax deductions since they live a comfortable life on my couch.</p>
<p>2009 1098T (one school) had 3 semesters of tuition and 2 semesters of scholarship. Went back and recalculated taxes based on 2 & 2 and there was no impact on my taxes. Will not be amending last year’s return.</p>
<p>2010 1098T (same school) had 1 semester of tuition and 2 semesters of scholarship. Deduction (2 kids still in college) increases $2500 if I go with 2 & 2. </p>
<p>I appreciate the advice here because it makes a lot more sense than the numbers on the 1098T.</p>
<p>I don’t because D1s school puts amounts for the school year for tuition (box 2) but for the calendar year for grants (box 5). So for fr year, they showed her full year of tuition but only one semester of grants. Because of this, she didn’t have to pay for any of her grant money because there was an overwhelming amount of tuition shown. That’s fine for fr yr and for soph and jr the numbers are pretty close because they are showing a full year of both tuition and grants, BUT for her sr year, it will show ONLY grant money from her last spring semester, and NO tuition. For this reason, I decided to keep everything constant, so for any given tax year, I used the tuition and grants that occurred during that calendar year.</p>
<p>1098-T - do not make the assumption that the figure in box 5 is a taxable scholarship or grant. Do not report that figure on your tax return without doing some calculations.</p>
<p>I do a spreadsheet and keep that with my tax paperwork each year.
I break it down by semester and make columns for the cost of tuition and books (non taxable) plus other items on the bill such as room and board.
Then I make a columns for how we paid the bill - scholarship, grant, loans, cash.
My kid’s school issues no guidance so I assign all scholarships and grants to tuition and books first. If the sum of scholarship and grants is less than tuition + books, I am home free. It always is in our case.</p>
<p>Can someone help me with this? My daughter is a freshman so I have no experience. The 1098 form is showing more scholarship received than expenses paid. But obviously we also have the living expenses. I guess I had thought we could apply some of the scholarship to the living expenses but when I enter it in Turbotax it is not giving me the tax deduction, even though I also entered what I paid out of pocket, because the scholarship amounts are more than the qualified deduction. I don’t mind if she ends up paying taxes on more of the scholarship money because she is in a much lower tax bracket than I am. Does anyone know how to fix this?</p>
<p>The living expense is not a “qualified educational expense” – a person has to eat and have a place to sleep whether or not they are in school. So money that is received for that purpose is taxable income. </p>
<p>So if your kid’s tuition is $15K and total cost of attendance, including room and board, is $30K – and there is $25K in scholarship money – then there is $10K in taxable income. It’s a little fuzzier than that, because there are some things that may be qualified educational expenses according to IRS rules but do not show on the 1098T, such as money spent for some text books or necessary supplies for a class – so if you are very sophisticated in understanding what is deductible and have maintained good records, you might be able to reduce the amount reported as taxable.</p>
<p>In my experience, the tax programs such as Turbo Tax and HR Block will NOT calculate scholarships and 1098-T’s correctly.
This is why you need to prepare your own spreadsheet.</p>
<p>^Just wondering, have you used TT recently? It seemed OK to me, although I don’t put in the the 1098 information as it appears on the form, but rather according to what I actually paid that year. They do have prompts to put in expenses for books and for outside scholarships. In looking at the education credits worksheet, they appeared to do it correctly.</p>
<p>I guess my question is why would my payments be automatically applied to the dorm fees instead of toward tuition? Second, how should I enter it so that I can get credit for my payments? Should I just not enter the 1098 information and enter the amount I paid and list it as qualified expenses? Then at the same time, when I prepare my daughter’s tax return should I enter the 1098 information? The 1098 is actually showing less taxable income for her than we had anticipated.</p>
<p>And JustAMom - what do you mean preparing my own spreadsheet? Do you mean just for my own records to keep track of what I have paid, what the school has paid, what the daughter has paid, etc - or do you mean something else?</p>
<p>Because it is the scholarship that is first applied towards qualified educational expenses (tuition, fees & books). If once scholarships have been used up, there are still qualified expenses remaining, then you can get credit for these on your taxes. Why? Because those are the tax rules.</p>
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<p>Whether you use the exact numbers on the 1098 or not, you still have to subtract scholarships first before you claim any qualified expenses.</p>
<p>That is the key. I have not used TurboTax but I know in previous years posters had complained about both. I use HR Block and don’t even try to input the information. I just do the caluclations myself.</p>
<p>PhotoOp - yes, see my post #12. If you have questions feel free to send me a pm.</p>
<p>Remember you have to caluculate your Education Tax Credit if appropriate. For that you need to figure out what was PAID in qualified expenses - tuition, fees, books, materials - NOT room and board. You can’t consider grant and/or scholarship monies that went toward qualified expenses.</p>
I don’t believe this is true. Where in the tax rules does it say this? I have researched this at some length and my understanding is that unless a scholarship specifically says it is for tuition and fees it is up to you how you decide what paid what.</p>