How to Enter Education Expenses in TurboTax for Form 1098-T with Scholarships and Loans
I'm working through my 2025 taxes using TurboTax and I'm confused about how to handle my education expenses when entering my Form 1098-T. I've reached the section where it's asking what portion of my grants/scholarships was used for room and board or other related expenses. Here's my situation: I received some grants, but the total amount is actually less than what I paid for tuition and fees alone. Most of my college funding actually comes from student loans, not grants or scholarships. So when TurboTax asks how much of my grants/scholarships went toward room and board or other expenses, should I just put $0 since all of my grants went toward tuition? Or am I supposed to enter the total grant amount anyway? I'm confused because my grants don't even cover all my tuition costs, let alone room and board. Any help would be appreciated! I don't want to mess up my education credits.
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Mateo Rodriguez
TurboTax is asking this question because it affects how your education tax benefits are calculated. If your scholarships/grants are less than your qualified tuition and fees, then you would enter $0 for the amount that went to room and board. Essentially, the IRS wants to know if any of your tax-free educational assistance (grants/scholarships) went toward non-qualified expenses like room and board. Since your grants didn't even cover your full tuition and fees (which are qualified expenses), then all of your grants went toward qualified expenses, and $0 went to room and board. This is actually good for your tax situation because you can claim education credits (like the American Opportunity Credit or Lifetime Learning Credit) based on qualified expenses that weren't covered by tax-free grants. Since your grants didn't cover all your tuition, you'll likely qualify for some education credits.
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Aisha Abdullah
•Thanks for explaining! So does that mean the student loans don't factor into this calculation at all? I always get confused about how loans interact with education credits.
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Mateo Rodriguez
•Correct, student loans don't affect your education credits in the same way grants do. You can claim education credits for expenses paid with student loan funds. The key difference is that grants/scholarships are potentially tax-free money you don't have to pay back, while loans are money you borrowed and will repay (even though you get a tax deduction for the interest later). So you can claim education credits for qualified expenses that were paid using student loans. This is why many students can claim the full education credit if their tuition was paid through loans rather than grants.
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Ethan Wilson
Just went through this exact situation last month using TurboTax! I was confused too but I ended up getting help through https://taxr.ai when I uploaded my 1098-T and financial aid documents. Basically, they confirmed that since my scholarships were less than tuition, I should enter $0 for the amount used for room and board. The system helped me understand that loans aren't considered "scholarships or grants" for this purpose. I was mixing them up and almost reported them wrong. They also helped me maximize my education credits by making sure I was counting all eligible expenses. Was super helpful since the TurboTax explanation wasn't clear to me.
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NeonNova
•Did you have to pay for the taxr.ai service? I'm on a super tight budget as a student and wondering if it's worth it.
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Yuki Tanaka
•How does the taxr.ai thing work? Does it actually do your taxes for you or just give advice? I'm trying to figure out if I need this since my school situation is pretty complicated with multiple scholarships and work-study.
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Ethan Wilson
•The base service has a free option that answered my basic questions, which was enough for my situation. They have paid tiers too if you need more complex help, but the free version might be enough for what you're asking about. It doesn't do your taxes for you - it's more like having a tax expert analyze your documents and explain what to do. You upload your forms, and it helps interpret them and gives specific guidance on how to enter everything in TurboTax. For education expenses specifically, it was really helpful because it explained exactly what numbers go where.
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Yuki Tanaka
Just wanted to update after trying taxr.ai that the previous commenter recommended. It actually cleared up my confusion completely! I uploaded my 1098-T and financial aid statement, and it explained exactly what to put where in TurboTax. Turns out I was totally overthinking the grants vs loans issue. Since my grants were less than tuition, I should put $0 for "grants used for room and board" just like you all said. But it also caught that I was eligible for the American Opportunity Tax Credit AND showed me which of my course materials could count as qualified expenses too - saved me like $500 more than I thought I'd get back!
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Carmen Diaz
If anyone is still stuck even after trying to figure this out online, I highly recommend using Claimyr (https://claimyr.com) to get through to the IRS directly. I was super confused about my education credits last year and spent DAYS trying to reach someone at the IRS with no luck. Claimyr got me through to a real IRS agent in about 20 minutes who walked me through exactly how to handle my 1098-T with partial scholarships and loans. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c The agent explained that for tax purposes, loans are totally separate from scholarships/grants, and you should only be concerned with how the "free money" (grants/scholarships) was allocated between qualified expenses (tuition/fees) and non-qualified expenses (room/board).
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Andre Laurent
•Does this actually work? I've tried calling the IRS multiple times and always get disconnected or have to wait for hours. Seems kinda sketchy that a third-party service could somehow get priority access.
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Emily Jackson
•I've heard about these "get through to the IRS" services before and they seem like such a scam. The IRS phone system is designed to handle calls in order. How could this possibly work unless they're doing something shady?
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Carmen Diaz
•It absolutely works! It's not about "priority access" - they use technology that navigates the IRS phone tree and waits on hold for you, then calls you when a real person answers. Nothing sketchy about it - you're getting the same place in line, just not wasting your own time on hold. The service is completely legitimate. They don't have special access to the IRS - they just handle the frustrating part of waiting on hold. Once you're connected to an IRS agent, it's a direct conversation between you and the IRS, exactly like if you had called yourself and waited.
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Emily Jackson
I need to admit I was totally wrong about Claimyr. After my skeptical comment, I was still desperate to talk to someone at the IRS about my education credits, so I reluctantly tried it. Within 30 minutes, I was talking to an actual IRS representative who explained exactly how to handle my 1098-T situation. She confirmed what others have said here - if your scholarships/grants are less than tuition and fees, then $0 went to room and board. The agent also explained how to properly document my qualified education expenses paid by loans, which TurboTax wasn't clear about. The service literally saved me hours of frustration and potentially hundreds in tax credits I might have missed. I'm genuinely impressed and apologize for my skepticism.
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Liam Mendez
Just a heads up that there's a difference between the American Opportunity Credit and the Lifetime Learning Credit when it comes to what expenses qualify. With AOTC, you can include course materials (books, supplies, equipment) even if you didn't buy them directly from the school. With LLC, the qualified expenses are more limited. Since you mentioned most of your funding is from loans, make sure you're tracking ALL qualified expenses because you can claim credits for expenses paid with loan money! This includes required books and supplies for your courses.
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Sophia Nguyen
•Wait, I can claim books and supplies with the AOTC but not with the Lifetime Learning Credit? How do I know which credit I should be claiming? I'm in my 5th year of undergrad if that matters.
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Liam Mendez
•The AOTC is generally better since it's partially refundable and has a higher maximum ($2,500 vs $2,000 for the LLC), but you can only claim it for 4 years of undergraduate education. Since you're in your 5th year, you're likely only eligible for the Lifetime Learning Credit now. With the LLC, qualified expenses are generally limited to tuition and fees required for enrollment. With AOTC, you can include books, supplies, and equipment needed for courses - even if not purchased from the school. That's why AOTC is usually more beneficial when you're eligible for it.
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Jacob Smithson
One thing nobody mentioned is that if your scholarships/grants exceed your qualified education expenses, the excess is actually taxable income! That's why Turbotax is asking about room and board allocation - it helps determine if you have any taxable scholarship income. In your case since the grants are less than tuition, you're good. But for anyone reading who has MORE in grants than in tuition, you need to report the excess as income! This catches so many students by surprise.
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Isabella Brown
•OMG thank you for saying this!! My roommate has a full ride scholarship that covers tuition, room, board, and gives her a stipend. She had NO idea parts of it could be taxable and has never reported it. Sending her this thread immediately!
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Hugh Intensity
Great question! You're absolutely right to put $0 for grants used for room and board since your grants didn't even cover your full tuition and fees. Think of it this way - the IRS wants to know if any "free money" (grants/scholarships) went toward non-qualified expenses. Since all your grants went toward qualified expenses (tuition/fees), none went to room and board. The student loans are completely separate from this calculation. You can actually claim education credits for qualified expenses paid with loan money, which is great news for you! Make sure you're also tracking any required course materials (books, supplies, equipment) if you're eligible for the American Opportunity Credit, as those count as qualified expenses too. Don't stress - you're handling this correctly by entering $0. Your loan-funded expenses can still qualify you for valuable education credits!
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NeonNova
•This is such a helpful breakdown! I'm a first-time filer dealing with a similar situation and was totally confused about the loan vs grant distinction. It's reassuring to know that loan-funded expenses can still qualify for credits - I was worried I wouldn't be eligible for anything since most of my college costs are covered by loans. Thanks for clarifying that the $0 entry is correct when grants don't cover full tuition!
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