Educational Credits - Form 1098-T - Box 5 Larger than Box 2--but should not be

[Gloria]

Student's parents paid $906 ($453 each quarter for two quarters) directly to a University to cover the tuition portion that Cal Grant did not cover. During the third quarter, the student takes a student loan in the amount of $1,800 and the University kept $412 to apply to the tuition (the portion that Cal Grant did not cover). So it seems that the parents should be able to take the educational credit in the amount of $1,318 ($906 + $412) plus $600 for books purchased for their dependent child.

Form 1098-T shows the following: Line 1-Payments Received (Blank---but payments were made to the University). Line 2-Amounts billed for qualified tuition: $6694. Line 5-Scholarships or Grants: $7,666 -- So it appears that the student received more grants than what was billed. But the student only received a Cal Grant that totalled $5,472 and that is why the parents and the student made the additional payments to the univeristy.

I want to calculate the credit but I do not want the parents to have to deal with audit issues in the future. I was going to contact the University to get clarification but on their web page it shows that they contract a 3rd party to complete the 1098-T so I may have problems making contact with the 3rd party.

What would yo do? Would you calculate the credit?

Thanks in advance for your help.

[grandmabee]

You go by what was actually paid in 2012. the 1098 are pretty much worthless. they are chosing to report by billed not paid. IRS goes by paid.

You have to get detail records.

[Jack from Ohio]

All grants and scholarships are counted, even ones from the college. Get the detailed breakdown of the billing for 2012. If grants and scholarships are larger than the amounts billed for tuition & fees and the books, there is no deduction.