Form 1098-T Confusion: Reporting $6,725 Tuition vs $3,748 Aid When I Paid Nothing Out of Pocket

Yes, you need to report this on your taxes! The 1098-T shows the total amount of qualified education expenses and any scholarships/grants received. Even if you didn't pay out of pocket, you still need to report it because it affects your taxable income calculation. Some scholarship money might be taxable if it exceeds qualified expenses.

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i was in the same boat last year and didnt report it...now im getting letters from the IRS 😭

dont skip reporting this! my sister thought the same thing and ended up owing penalties when they caught it

Box 5 > Box 1 = maybe taxable scholarship. Box 1 > Box 5 = possible education credit. Either way gotta report it fam

lol the IRS wants to know EVERYTHING even if u paid $0

The confusion makes total sense! Here's what's happening: Box 1 ($6,725) shows what your school received for tuition, and Box 5 ($3,748) shows scholarships/grants they processed. The $2,977 difference likely represents other financial aid (like loans) that covered the rest. Even though you paid $0 out of pocket, you still need to report this because the IRS uses it to determine if you qualify for education credits and whether any scholarship money is taxable. The good news is since your scholarships ($3,748) are less than your qualified expenses ($6,725), you probably won't owe taxes on the scholarship money. Just enter the numbers as they appear on your 1098-T and let the tax software do the calculations!

The 1098-T can definitely be confusing! You absolutely need to report it even though you didn't pay out of pocket. The form is required because it shows the IRS your educational expenses and aid received, which affects potential education credits and determines if any scholarship money is taxable income. In your case, since your scholarships ($3,748) are less than your qualified expenses ($6,725), the scholarship portion likely won't be taxable. The difference could be from loans or other non-grant aid. Just enter the numbers exactly as shown on your 1098-T - Box 1: $6,725, Box 5: $3,748 - and let your tax software calculate everything correctly. You might even qualify for education credits!

Just want to echo what others have said - definitely report it! I made the same mistake my freshman year thinking "I didn't pay anything so why report it?" Big mistake. The 1098-T is basically a paper trail for the IRS to track education expenses and financial aid. Even though your aid covered everything, those numbers help determine if you're eligible for education credits like the American Opportunity Credit (up to $2,500) or Lifetime Learning Credit. The fact that your qualified expenses ($6,725) exceed your scholarships ($3,748) is actually good news - means your scholarships likely aren't taxable and you might qualify for credits. Don't stress about the $2,977 difference, that's probably just reflecting how your school processed different types of aid. Just plug in those exact numbers and let the software work its magic!

Hey Isabella! I totally get the confusion - the 1098-T can be super misleading when you're on full financial aid. Here's the deal: you absolutely need to report those numbers even though you paid $0 out of pocket. The form isn't about what YOU paid, it's about tracking all the education money that flowed through your school. Box 1 shows what your school received for qualified expenses ($6,725) and Box 5 shows scholarships/grants they processed ($3,748). That $2,977 difference is likely covered by other aid like federal loans, work-study, or different types of grants that don't show up in Box 5. The good news? Since your scholarships are less than your qualified expenses, you probably won't owe taxes on the scholarship money AND you might qualify for education credits like the American Opportunity Credit. Just enter those exact numbers from your 1098-T and let the tax software do the heavy lifting!