Form 1098-T

[cpabsd]

New client just brought in 1098-T. The taxpayer was in school for most of 2008. He was in graduate school. He was paid through a training grant for living expenses. The 1098T has 4895 in box 2 and 25086 in box 5 (scholarships and grants). Does this mean he has $20,191 in taxable income? I will be verifying with client that all that money was spent on living expneses and not education costs.

[kcjenkins]

Not necessarily, if the box 5 amount was used for qualifying expenses it's not taxable. But if it was used for non-qualifying expenses, it would be taxable [on line 21]. Also he should have received a 1099G, box 6, for a taxable grant. I think you need to do some digging on this one, I've seen lots of 1098-Ts that have errors.

[Dan]

New client just brought in 1098-T. The taxpayer was in school for most of 2008. He was in graduate school. He was paid through a training grant for living expenses. The 1098T has 4895 in box 2 and 25086 in box 5 (scholarships and grants). Does this mean he has $20,191 in taxable income? I will be verifying with client that all that money was spent on living expneses and not education costs.

The 1040 Express Answers on page 13-14 says: "Qualified Education Expenses include the following:

1. Tuition and certain related expenses required to enroll in an eligible insitution.

2. Student activity fees and expenses for course-related books, supplies and equipment

are included in qualified expenses only if the fees and expenses must be paid to the

institution as a condition of enrollment.

3. Expenses that do not qualify include room and board, travel, and clerical help.

I have never seen a 1098T like this. I usually see a bigger amount in box 2

[RitaB]

The 1040 Express Answers on page 13-14 says: "Qualified Education Expenses include the following:

1. Tuition and certain related expenses required to enroll in an eligible insitution.

2. Student activity fees and expenses for course-related books, supplies and equipment

are included in qualified expenses only if the fees and expenses must be paid to the

institution as a condition of enrollment.

3. Expenses that do not qualify include room and board, travel, and clerical help.

I have never seen a 1098T like this. I usually see a bigger amount in box 2

Yes, and you still have to check with client. Don't trust the 1098-T for anything except "more that 1/2 time" or whatever that is down there. I have seen MANY with tax-free assistance that is not on the 1098-T at all. I'll betcha education credits is one of the areas most screwed up on tax returns. I'll bet I screwed up a bunch of them when the 1098-T first came out, cause I assumed you could actually use the figures on them.

[Edward]

For cpabsd: Would be interesting how you eventually solve your problem on the 1098-T in view of what kcjenkins said in his post? I received a 1098-T today (the long version): 9051.00 in box 5 and 3165.00 in box 1. When I looked on the reverse side it showed it provided additional info like the 3165.00 being QUALIFIED and also 4258.00 being UNQUALIFIED.

After completing the SCHOLARSHIPS & FELLOWSHIPS - TAXABLE AMOUNT WORKSHEET from QF, I came up with $5886.00 as taxable income for line 7 of the 1040. The benefit of the Long Form 1098-T is that on the reverse side it lets you know the QUAL & NON-QUAL parts of the Scholarship, which the short form dosen't. I believe I have the correct taxable amount. Any comments would be appreciated.

[grandmabee]

For cpabsd: Would be interesting how you eventually solve your problem on the 1098-T in view of what kcjenkins said in his post? I received a 1098-T today (the long version): 9051.00 in box 5 and 3165.00 in box 1. When I looked on the reverse side it showed it provided additional info like the 3165.00 being QUALIFIED and also 4258.00 being UNQUALIFIED.

After completing the SCHOLARSHIPS & FELLOWSHIPS - TAXABLE AMOUNT WORKSHEET from QF, I came up with $5886.00 as taxable income for line 7 of the 1040. The benefit of the Long Form 1098-T is that on the reverse side it lets you know the QUAL & NON-QUAL parts of the Scholarship, which the short form dosen't. I believe I have the correct taxable amount. Any comments would be appreciated.

What about the books. You can deduct them from scholarship before you figure what scholarship is taxable. Books don't count on tuition credits or deduction but do count for scholarships