1098-T excess scholarship not showing up as income on tax returns

This is actually a common issue with tax software. The excess scholarship amount (when scholarships exceed qualified educational expenses) is definitely taxable income, but many tax programs don't automatically add it where you'd expect. Look for a section specifically for "Other Income" or sometimes "Scholarships and Grants." You might need to manually report that $156 on Schedule 1, Line 8 as "Other Income" and write "SCH" next to it (for scholarship). Some tax programs have a specific interview question about excess scholarships, but it's often buried in the education section rather than the income section. If your scholarship was used for non-qualified expenses (like room and board), that portion is taxable even if it doesn't exceed your tuition. Make sure you're calculating this correctly - only amounts used for tuition, fees, and required course materials are non-taxable.

I had almost the exact same problem last year with excess scholarship income! After hours of frustration, I found that taxr.ai (https://taxr.ai) could actually analyze my 1098-T and tell me exactly where to report the excess scholarship income in my tax software. You just upload your 1098-T and W-2, and it analyzes everything to show you what's missing from your return. It showed me that I needed to manually add the excess scholarship as "Other Income" with the description "SCH" exactly as the previous commenter mentioned. The difference was it walked me through exactly which screens to navigate to in my specific tax software to make the entry correctly.

I was really skeptical about using taxr.ai when I first heard about it, but I gave it a try after struggling with the same excess scholarship issue. Honestly, it was super helpful! I uploaded my 1098-T and it immediately identified that $720 of my scholarship was taxable (I had spent part on housing). The step-by-step instructions for entering it in TaxAct were perfect - it told me exactly which menus to navigate through and what to enter in each field. My return was accepted by the IRS with no issues. For anyone dealing with education tax forms, it's definitely worth checking out.

If you've tried multiple tax software options and you're still having issues, you might want to try calling the IRS directly. I know it sounds terrible, but I used Claimyr (https://claimyr.com) to get through to an actual IRS agent without waiting on hold forever. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c I had a similar scholarship reporting issue, and the IRS agent gave me the exact instructions for my situation. Turns out I was reporting my excess scholarship in the wrong place all along! The call took less than 10 minutes once I got connected, and I felt so much better having official guidance from the source.

I need to eat my words from my skeptical comment! I tried Claimyr yesterday for a different tax issue (missing refund), and it actually worked exactly as described. I filled out their form, put in my number, and about 35 minutes later got a call connecting me directly to an IRS agent. The agent confirmed that excess scholarship money needs to be reported as "Other Income" on Schedule 1, Line 8, with "SCH" in the description field. He also mentioned that some tax software has specific interview questions about scholarships where you can enter this information. Definitely worth using the service if you need definitive answers from the IRS instead of just guessing.

Another option is to use Form 1040 Schedule 1 and just add the excess scholarship amount on line 8 as "Other Income." If you put "SCH" in the description field, the IRS will know it's from a scholarship. I've had to do this manually for the past three years because my tax software (TaxAct) wouldn't automatically add it. It's annoying but pretty straightforward once you know where to put it.

Just a warning - don't skip reporting this! I didn't report $230 of excess scholarship income a few years ago because my tax software didn't prompt me to, and I got a letter from the IRS about 8 months later asking for additional tax payment plus a small penalty. Schools report the scholarship amounts to the IRS on form 1098-T, so they can match that against your return.

I had this exact same issue last year! The key is that most tax software doesn't automatically flag excess scholarships as taxable income, even though it should. What worked for me was manually entering it in the "Other Income" section. In most tax programs, look for something like "Other Income" or "Additional Income" - it's usually in the main income section but might be buried under "Less Common Income" or similar. Enter the $156 with a description like "Excess Scholarship" or just "SCH" and it should flow to Schedule 1, Line 8. The important thing is that this excess amount is definitely taxable income that needs to be reported. The IRS gets a copy of your 1098-T from your school, so they'll expect to see that excess amount somewhere on your return if it exists. Don't risk having to deal with correspondence from the IRS later - it's much easier to just add it now!