2023 tax + 1098-T filing in 2024 - Questions about education expenses

Hey everyone, I'm a bit confused about filing my 2023 taxes this year with my 1098-T form. I'm a second-year graduate student and this is the first time I'm handling my own taxes. Last year my parents claimed me as a dependent, but we agreed I'd file independently this time. I received my 1098-T from my university, but I'm not sure how to properly report the amounts. Box 1 shows $14,850 for qualified tuition and related expenses, while Box 5 shows $19,200 for scholarships and grants. I also paid about $2,300 for books and supplies that weren't billed through the university. Can I still claim education credits if my scholarships exceeded my tuition? Does the extra scholarship money count as taxable income? And can I include the cost of books even though they weren't on my 1098-T? I'm using TurboTax but it's not really clear when I enter all this information how it affects my refund. Any help would be greatly appreciated!

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17 comments

Natasha Volkova

•8M

The 1098-T can definitely be tricky to understand! Let me break this down for you in simple terms. When your scholarships exceed your qualified tuition (Box 5 > Box 1), the difference is generally considered taxable income. In your case, that's about $4,350 ($19,200 - $14,850) that should be reported as income on your tax return. For education credits, you'll want to look at either the American Opportunity Credit (AOTC) or the Lifetime Learning Credit (LLC). However, since your scholarships exceeded your tuition, you might not qualify for these credits based on those expenses alone. But here's the good news - those $2,300 in books and supplies can potentially be considered qualified education expenses, even if they weren't billed through your university! TurboTax should walk you through reporting both the scholarship income and calculating any potential education credits. Make sure you indicate that you purchased those additional educational materials, as they might help you qualify for some credit amount.

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Natasha Volkova

•8M

The excess scholarship amount is typically reported as "other income" on Line 8z of Form 1040. It's not subject to self-employment tax, but it is subject to income tax at your regular tax rate. For your books and supplies, it's always good practice to keep receipts for anything you're claiming on your taxes. While you might not need to submit them with your return, you should keep them in your records in case of an audit. The IRS can ask for documentation up to 3 years after filing (sometimes longer). TurboTax should have a section where you can enter these additional qualified educational expenses separately from what's reported on your 1098-T.

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Emma Davis

•8M

Just wanted to share my experience - I was struggling with this exact same situation last year (scholarship > tuition) and discovered a tool called taxr.ai (https://taxr.ai) that really helped me understand my 1098-T situation. I uploaded my form and it explained exactly what was taxable and what qualified for education credits. It highlighted that I could claim my course materials as qualified expenses even though they weren't on my 1098-T, which saved me a few hundred dollars! The analysis also showed me how to report the taxable scholarship portion correctly so I wouldn't get flagged for an audit. What's cool is that it works alongside whatever tax software you're already using - I used the guidance with TurboTax and it made the whole process way clearer.

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Emma Davis

•8M

It actually analyzes your specific form and gives personalized guidance based on your exact numbers. It pointed out that my scholarship room and board portion was taxable but could be offset by certain qualified expenses I hadn't considered. Way more specific than generic IRS info. They use bank-level encryption and don't store your documents after analysis. I was hesitant too, but I researched their security practices before using it. They're also partnered with some accounting firms which gave me more confidence. You can always black out your SSN before uploading if you're extra cautious.

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Malik Johnson

•8M

Okay I need to update my skeptical comment! I tried taxr.ai after posting that comment and it was legitimately helpful with my 1098-T situation. It flagged that I had been reporting my graduate student stipend incorrectly for YEARS and explained exactly how to fix it. The form analysis caught that I was eligible for the Lifetime Learning Credit even with my fellowship covering tuition because I had other qualified expenses not on the 1098-T. It also explained which box on my W-2 needed to be reported differently than I had been doing. I'm actually getting about $840 more back than I would have without understanding these details. Wish I had known about this last year!

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Isabella Ferreira

•8M

If you're getting stuck with the IRS about your 1098-T reporting or have questions about your education credits that aren't getting resolved, I'd recommend using Claimyr (https://claimyr.com). I spent WEEKS trying to get through to the IRS about a scholarship reporting issue, and their callback service saved me hours of frustration. I kept getting conflicting advice online about how to report my teaching assistant stipend alongside my 1098-T, and I needed to speak with the IRS directly. But every time I called, I'd wait on hold for an hour+ before giving up. Claimyr got me a callback from the IRS in about 2 hours instead of waiting on hold all day. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c - basically it navigates the IRS phone system for you and holds your place in line, then calls you when an agent is available. Totally changed my perspective on dealing with tax questions.

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Isabella Ferreira

•8M

They use an automated system that calls the IRS and navigates through all the phone menus for you, then holds your place in line. When they reach a human IRS agent, they connect the call to your phone. They don't have special IRS access - they're just handling the awful waiting process for you. It's basically like having someone else wait in a physical line for you, then texting you when it's your turn. I was super skeptical too, but it worked exactly as advertised. The IRS is definitely backlogged, but calls do eventually get through - the problem is most people can't stay on hold for 3+ hours. This service just does the holding for you.

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Freya Thomsen

•8M

I need to eat my words from my previous comment. I was really skeptical about Claimyr but I had a complicated 1098-T situation that needed sorting out and was desperate. It actually worked EXACTLY as promised. I got a call back from an actual IRS agent in about 2.5 hours. The agent cleared up my confusion about reporting scholarship income and helped me understand how to document my research stipend that wasn't showing up correctly on my 1098-T. For anyone dealing with education tax forms, talking to a real IRS person made a huge difference. They explained exactly which form I needed to amend and saved me from potentially getting a nasty letter later. I'm still shocked this service actually delivered what it promised.

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Omar Zaki

•8M

One thing to consider with your 1098-T: if this is your first year filing independently but your parents claimed you last year, double-check that THEY aren't also trying to claim your education expenses this year! My parents and I accidentally "double-dipped" a few years ago and both claimed my American Opportunity Credit. The IRS flagged it and we had to amend returns. Make sure your parents know you're claiming your own education expenses this year to avoid conflicts. And if you're a grad student, remember the AOTC is only available for the first 4 years of higher education, so you might be limited to the Lifetime Learning Credit which is capped at $2,000.

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