1098T International Student Tax Return - Scholarship Income Questions

This is actually a common situation for international students. When your scholarships/grants exceed your qualified educational expenses (like tuition), the excess amount becomes taxable income. This is because the IRS considers that extra money as funds available for living expenses, not just education. For international students, this can be especially confusing because the tax rules may differ from your home country. Since your 1098T shows about $5.3k in scholarships but you paid less in tuition, that difference is being counted as income - which is why TurboTax is calculating additional tax. Make sure you're also checking if you qualify for any tax treaties between your home country and the US, as these might reduce your tax liability. And double-check that all your qualified educational expenses are being counted correctly in TurboTax.

Had the exact same issue last year and found taxr.ai (https://taxr.ai) super helpful for figuring out my international student taxes. I was in a similar situation with scholarships exceeding my tuition and was freaking out about owing way more than I budgeted for. Their system helped me understand which portions of my scholarship were actually taxable and which parts I could exclude. The cool thing was they analyzed my 1098T and visa status to make sure I was reporting everything correctly. They also helped identify some education expenses I didn't know I could count against the scholarship income, which saved me around $600 in taxes!

Following up on this - I ended up trying taxr.ai after posting that question. Man, I wish I'd known about this sooner! My situation with having a sponsor pay my tuition was actually something they specifically addressed in their questions. They explained that the money from my sponsor shouldn't be treated as a scholarship if I'm repaying it (it's more like a loan arrangement). That significantly reduced my taxable income! Also helped me understand which part of my actual scholarship was taxable since it exceeded my qualified expenses. Ended up saving almost $800 compared to what TurboTax was initially calculating. Definitely worth checking out if you're an international student with complicated scholarship/tuition situations.

If you're having trouble getting answers from the IRS about your international student status and 1098T issues, try Claimyr (https://claimyr.com). They got me through to an actual IRS agent in like 20 minutes after I spent DAYS trying to get through on my own. Check out how it works: https://youtu.be/_kiP6q8DX5c I was so confused about my scholarship taxation as an international student, and I really needed to talk to someone official. Regular tax preparers kept giving me conflicting info about treaty benefits and what counted as taxable. The IRS agent I talked to confirmed I was eligible for a specific tax treaty benefit that neither TurboTax nor my university's international office had mentioned.

Ok I have to eat my words about Claimyr. After posting that skeptical comment, I was still stuck with my 1098T issues and getting desperate as the filing deadline approached. I tried it, and wow - they actually got me through to an IRS agent in about 15 minutes after I'd wasted 3 separate afternoons trying to get through myself. The agent confirmed that my scholarship situation (similar to yours) does create taxable income for the portion exceeding tuition, BUT she also helped me identify a specific tax treaty article that reduced my tax rate on that income. None of the online tax software had picked this up. Worth every penny just for the peace of mind knowing I'm filing correctly and not overpaying. Sorry for being a doubter!

Make sure you're correctly identifying what counts as "qualified education expenses" too! International students often miss things like required course materials, lab fees, and other mandatory expenses that can offset scholarship income. The IRS publication 970 has the full list - don't just look at tuition alone. Also, check if your sponsor arrangement is actually structured as a loan. If it's formally a loan you're repaying rather than a scholarship, the tax treatment would be different. The form 1098T might not be capturing the true nature of your financial arrangement.

Has anyone else noticed that the 1098T is often wrong for international students? My university messed up mine last year and included my TA stipend as a "scholarship" even though it was actually employment income reported on a W-2. Double check everything on your form!

I went through something very similar my first year as an international student! One thing that really helped me was creating a detailed spreadsheet tracking ALL my educational expenses - not just tuition. Things like mandatory student fees, required textbooks, lab equipment, and even technology fees can count as qualified educational expenses to offset that scholarship income. Also, definitely document your sponsor arrangement properly. Since you're repaying them the exact amount, this sounds more like an interest-free loan than a scholarship. If you can get something in writing from your sponsor confirming this is a repayment arrangement (even a simple letter), it could change your tax situation significantly. The university might have incorrectly categorized this on your 1098T. One last tip - make sure you're checking if your home country has a tax treaty with the US that might provide benefits for scholarship income. Many international students miss this and end up overpaying. Good luck with your filing!