In my form 1099-T it says I have no tuition expenses (box 1) but in the scholarship box, it’s says $2,000 that I received. I realistic spent on $150 on school expenses. The remaining $1,850 was for non school related stuff. What form/line do I included the $1,850 that wasn’t used for school? With paying taxes on that amount and so little school expenses, I do still qualify for the American opportunity tax credit? I’m filling single, used the credit only once before, not a felony,etc.
Hi George, To report the $1,850 scholarship for non-education expenses on your taxes, you should include it on Schedule 1, line 8 (www.irs.gov/pub/irs-pdf/f1040s1.pdf), which will flow into your 1040 line 8 as other income. If you're using tax software, you can search for "scholarship" to find the appropriate section or navigate to the "Income" and "Other income" sections. In order to qualify for the American Opportunity (AOTC) or Lifetime Learning (LLC) tax credit, your education expenses must exceed the amount of your scholarship. If your scholarship is greater than your total education expenses, you won't be able to use the credit. However, you can still use the AOTC in the future when you have education expenses that exceed your scholarship. It may be more advantageous to wait until you can take advantage of the full $2,500 credit rather than only a portion of it. Keep in mind that you can use the AOTC up to four times, and they don't have to be in consecutive years. If you don't qualify for the AOTC, you can also check if you qualify for the Lifetime Learning Credit, which has less strict eligibility criteria. Here is a comparison between the two education credits: www.eitc.irs.gov/other-refundable-credits-toolkit/compare-education-credits/compare-education-credits Good Luck! 🍀
Hello I have a concern, the company I work for is helping employees to go back to school and they cover all the tuition fees for therefore, we do not have to pay nothing, since I didn't pay nothing I was wondering if I need to add the form 1098t when filling the federal income tax return? thank you.
Hello Gladimy, Per the IRS website: If you receive educational assistance benefits from your employer under an educational assistance program, you can exclude up to $5,250 of those benefits each year. This means your employer should not include the benefits with your wages, tips, and other compensation shown in box 1 of your Form W-2. If the amount is above that, it can become taxable. Your employer should know whether the assistance program you received falls under the IRS education assistance program. See Publication 970 on Education, pg 58: www.irs.gov/pub/irs-pdf/p970.pdf#page=58
Hi, I got grants and FAFSA and I have three of the 1098-T (2020,2021,2022) and they all say “Copy B For Student: This is important tax information and is being furnished to the IRS. This form must be used to complete Form 8863 to claim education credits. Give it to the tax preparer or use it to prepare the tax return”. I am a dependent and my family has a tax preparer who does our taxes, but I did not know I was supposed to inform our tax preparer about these; I thought that he would have already received the information through the IRS. I will send him the 2022 form when we do our taxes in a few months but what do I do about the 2020 and 2021 forms? My school has sent me online versions of them. Will I get in trouble for not have shown those forms in 2020 and 2021? Should I mention to the tax preparer that I didn’t send the 2020 and 2021 forms?
Hi Kindree, Many tax issues can be corrected and fixed for up to three years during the current tax season. First, check if you received more scholarships/grants in Box 5 of your 1098-T than what you had in Box 1 as your qualified tuition expenses. This is the most important factor. If Box 5 is larger than Box 1, you may have some taxable grants that must be reported on your tax returns. However, if you were still a dependent and didn't earn much money during those years, it may not be taxable for you. You can file an amendment (form 1040-X) to double-check this with your tax preparer. If Box 5 is smaller than Box 1, your parents (if they paid for your education expenses) may be eligible to claim valuable American Opportunity Tax Credits (AOTC) of up to $2,500 in dollar-for-dollar credits against your/their taxes owed. Your parents can still claim this credit for the past three years by filing an amendment (form 1040-X). Make sure to bring this up to your tax preparer to see if it applies to your situation. Here is a comparison between the two education credits: www.eitc.irs.gov/other-refundable-credits-toolkit/compare-education-credits/compare-education-credits Consider if there are any additional fees for filing the amendment and if the potential benefits outweigh the costs. Another option is to visit free tax preparation sites that offer assistance with amending tax returns. Some of these sites may only offer amendments during the summer and not during tax season. Here you can search for places near you (scroll down to the bottom of the page): www.irs.gov/individuals/free-tax-return-preparation-for-qualifying-taxpayers Good Luck!🍀
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Is that possible for you to give a clear picture from 8863 to 1040, the critical steps
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In my form 1099-T it says I have no tuition expenses (box 1) but in the scholarship box, it’s says $2,000 that I received. I realistic spent on $150 on school expenses. The remaining $1,850 was for non school related stuff. What form/line do I included the $1,850 that wasn’t used for school? With paying taxes on that amount and so little school expenses, I do still qualify for the American opportunity tax credit? I’m filling single, used the credit only once before, not a felony,etc.
Hi George,
To report the $1,850 scholarship for non-education expenses on your taxes, you should include it on Schedule 1, line 8 (www.irs.gov/pub/irs-pdf/f1040s1.pdf), which will flow into your 1040 line 8 as other income. If you're using tax software, you can search for "scholarship" to find the appropriate section or navigate to the "Income" and "Other income" sections.
In order to qualify for the American Opportunity (AOTC) or Lifetime Learning (LLC) tax credit, your education expenses must exceed the amount of your scholarship. If your scholarship is greater than your total education expenses, you won't be able to use the credit.
However, you can still use the AOTC in the future when you have education expenses that exceed your scholarship. It may be more advantageous to wait until you can take advantage of the full $2,500 credit rather than only a portion of it. Keep in mind that you can use the AOTC up to four times, and they don't have to be in consecutive years.
If you don't qualify for the AOTC, you can also check if you qualify for the Lifetime Learning Credit, which has less strict eligibility criteria.
Here is a comparison between the two education credits: www.eitc.irs.gov/other-refundable-credits-toolkit/compare-education-credits/compare-education-credits
Good Luck! 🍀
Hello I have a concern, the company I work for is helping employees to go back to school and they cover all the tuition fees for therefore, we do not have to pay nothing, since I didn't pay nothing I was wondering if I need to add the form 1098t when filling the federal income tax return? thank you.
Hello Gladimy,
Per the IRS website:
If you receive educational assistance benefits from your employer under an educational assistance program, you can exclude up to $5,250 of those benefits each year. This means your employer should not include the benefits with your wages, tips, and other compensation shown in box 1 of your Form W-2.
If the amount is above that, it can become taxable. Your employer should know whether the assistance program you received falls under the IRS education assistance program. See Publication 970 on Education, pg 58: www.irs.gov/pub/irs-pdf/p970.pdf#page=58
Hi, I got grants and FAFSA and I have three of the 1098-T (2020,2021,2022) and they all say “Copy B For Student: This is important tax information and is being furnished to the IRS. This form must be used to complete Form 8863 to claim education credits. Give it to the tax preparer or use it to prepare the tax return”. I am a dependent and my family has a tax preparer who does our taxes, but I did not know I was supposed to inform our tax preparer about these; I thought that he would have already received the information through the IRS. I will send him the 2022 form when we do our taxes in a few months but what do I do about the 2020 and 2021 forms? My school has sent me online versions of them.
Will I get in trouble for not have shown those forms in 2020 and 2021? Should I mention to the tax preparer that I didn’t send the 2020 and 2021 forms?
Hi Kindree,
Many tax issues can be corrected and fixed for up to three years during the current tax season. First, check if you received more scholarships/grants in Box 5 of your 1098-T than what you had in Box 1 as your qualified tuition expenses. This is the most important factor.
If Box 5 is larger than Box 1, you may have some taxable grants that must be reported on your tax returns. However, if you were still a dependent and didn't earn much money during those years, it may not be taxable for you. You can file an amendment (form 1040-X) to double-check this with your tax preparer.
If Box 5 is smaller than Box 1, your parents (if they paid for your education expenses) may be eligible to claim valuable American Opportunity Tax Credits (AOTC) of up to $2,500 in dollar-for-dollar credits against your/their taxes owed. Your parents can still claim this credit for the past three years by filing an amendment (form 1040-X). Make sure to bring this up to your tax preparer to see if it applies to your situation.
Here is a comparison between the two education credits: www.eitc.irs.gov/other-refundable-credits-toolkit/compare-education-credits/compare-education-credits
Consider if there are any additional fees for filing the amendment and if the potential benefits outweigh the costs.
Another option is to visit free tax preparation sites that offer assistance with amending tax returns. Some of these sites may only offer amendments during the summer and not during tax season.
Here you can search for places near you (scroll down to the bottom of the page): www.irs.gov/individuals/free-tax-return-preparation-for-qualifying-taxpayers
Good Luck!🍀