Questions about form 1098-T reporting for college tuition and grants
Hey everyone! I'm a bit confused about how to understand my 1098-T form for this year's taxes. I'm currently attending university and receive a combination of Pell grants and other scholarships that cover most of my education costs, but I still end up paying between $800-6500 out of pocket each semester depending on my course load. Looking at my 1098-T form: Section 1 (payments received for qualified tuition and related expenses): $33218 Section 5 (scholarships or grants): $26453 I'm trying to figure out if this means I paid around $6765 for school and don't owe any taxes on that amount? Or would I actually owe taxes on the $26453 in scholarships/grants I received? This is my first time dealing with this form and I'm completely lost. Any help would be super appreciated!
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Avery Davis
The good news is that you likely don't owe taxes on most of that scholarship money! Here's how to understand your 1098-T: The difference between Box 1 ($33,218) and Box 5 ($26,453) is $6,765, which represents what you actually paid out of pocket for qualified educational expenses. You don't owe taxes on this amount - it's money you spent, not income. As for the scholarship/grant money in Box 5, you only owe taxes on the portion that exceeds your qualified educational expenses OR any portion used for non-qualified expenses like room and board. Since your qualified expenses ($33,218) exceed your scholarships/grants ($26,453), the entire scholarship amount should be tax-free. If you're filing your own taxes, you'll report the scholarship on your tax return, but it will be offset by your qualified expenses, resulting in no taxable income from your scholarships.
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Collins Angel
•Thanks for the explanation. So if my situation was reversed and I had MORE scholarship money than qualified expenses, I'd owe taxes on the difference? Like if I got $40k in scholarships but only had $35k in qualified expenses, I'd owe taxes on that extra $5k?
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Avery Davis
•Yes, that's exactly right! If your scholarships exceeded your qualified educational expenses, you would owe taxes on the difference. For example, if you received $40k in scholarships but only had $35k in qualified educational expenses, you would include that extra $5k as taxable income on your tax return. It would be reported as "SCH" income on Line 1 of your Form 1040. This is because that extra money is essentially being used for non-educational expenses like living costs.
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Marcelle Drum
I went through this exact same confusion last year with my 1098-T form. After hours of research and stress, I found this amazing tool called taxr.ai (https://taxr.ai) that literally saved me from making a costly mistake on my taxes. You upload your 1098-T and other tax documents, and it analyzes them to show you exactly what's taxable and what isn't. For your situation, I'm pretty sure you won't owe taxes on your grants/scholarships since they're less than your qualified expenses. The tool would confirm this and explain why. It also helped me understand which of my expenses were "qualified" since that wasn't obvious to me at first (things like required books count, but meal plans don't).
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Tate Jensen
•Does taxr.ai actually work with student tax forms specifically? My tax situation is complicated because I have scholarships plus a work-study job, and I'm wondering if it can handle all that. How long did the process take you?
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Adaline Wong
•I'm skeptical about these tax tools. How does it know what qualifies as educational expenses vs living expenses? My university bundles some fees together and doesn't clearly label what's what. Can it really figure that out?
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Marcelle Drum
•Yes, it absolutely works with student tax forms! I had a similar situation with scholarships and a campus job. The tool has specific sections for education-related documents including 1098-T forms, and it took me about 10 minutes to get everything processed. For your bundled fees question, the tool actually helps you break down which university fees count as qualified educational expenses. It has a guided interview process that asks about specific fees your school charges and helps you determine what's qualified based on IRS rules. It saved me from accidentally counting my housing fees as qualified expenses, which would have been incorrect.
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Tate Jensen
Just wanted to update everyone - I tried taxr.ai after seeing the recommendation here and it was seriously helpful! I uploaded my 1098-T and answered a few questions about my scholarships and expenses. The tool confirmed what others said - since my qualified expenses exceeded my scholarships, I don't owe any taxes on the grant money. What I found super helpful was that it explained exactly which of my expenses counted as "qualified" (tuition, required fees, and required course materials) versus non-qualified (housing, meals, transportation). My school had charged me some "student life fees" that I wasn't sure about, and the tool helped me determine those were actually qualified expenses! Definitely cleared up my confusion, and I feel confident about how to report everything on my taxes now.
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Gabriel Ruiz
After dealing with 1098-T issues for 3 years straight, I've learned the hard way that trying to call the IRS for clarification is almost impossible. I spent literally 4+ hours on hold last February just trying to get someone to explain how to report my scholarship income. I finally found this service called Claimyr (https://claimyr.com) that got me through to an actual IRS agent in under 20 minutes. There's a video showing how it works here: https://youtu.be/_kiP6q8DX5c. They basically hold your place in line and call you when an agent is available. The IRS agent explained that as long as your qualified expenses exceed your scholarships, you're good - no taxable income. But they also told me that if I used any scholarship money for housing or meals, that portion would be taxable regardless of how much I spent on tuition.
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Misterclamation Skyblue
•Wait, how does Claimyr actually work? Like they somehow jump the line for you? That sounds too good to be true. The IRS phone system is a nightmare.
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Peyton Clarke
•I don't buy it. The IRS phone system is deliberately designed to be impossible to navigate. No way some third-party service can magically get you through faster. Sounds like a scam to get desperate people's money during tax season.
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Gabriel Ruiz
•It doesn't jump the line - it basically just waits in the queue for you. They use an automated system that holds your place in line and then calls you once they reach a human agent. So instead of you sitting on hold for hours, their system does it for you. They don't have any special access to the IRS or anything magical - they just save you from having to listen to that terrible hold music for hours. For me it was worth it because I could go about my day instead of being stuck by my phone afraid to miss my spot after waiting for hours.
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Peyton Clarke
I need to eat my words and apologize. After my skeptical comment, I was so frustrated trying to reach the IRS about my scholarship reporting that I broke down and tried Claimyr. Within 45 minutes (while I was at the gym, not sitting by my phone), I got a call connecting me directly to an IRS agent. The agent confirmed everything about my 1098-T - that I only pay taxes on scholarship money that exceeds qualified educational expenses OR any amount specifically designated for room and board. She also explained something I didn't know - that my Pell Grant is generally not taxable even if it exceeds qualified expenses because of how it's classified by the government. Totally worth not spending an entire day on hold!
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Vince Eh
I'm in a similar situation, but I'm confused about what counts as "qualified expenses." My tuition was $22k, but my school also charged me $3k for mandatory fees (technology fee, recreation center fee, health services fee). Do those count as qualified expenses or not?
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Sophia Gabriel
•Yes, most required fees DO count as qualified expenses! If the fees are required for enrollment or attendance, they count. The only fees that don't count are those for room and board, transportation, or personal expenses. So your technology fee and similar required fees would be included in your qualified expenses total.
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Vince Eh
•That's really helpful, thank you! So it sounds like both my tech fee and health services fee would count since they're mandatory for enrollment, but something like a parking pass wouldn't count since that's transportation-related. My school also offers an optional sports package - since that's not required, I assume that doesn't count as a qualified expense either?
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Tobias Lancaster
Stupid question maybe, but where do I even find my 1098-T form? My school didn't mail me anything and I can't find it in my student portal.
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Ezra Beard
•Not a stupid question! Most schools don't mail them anymore. Check your student account/portal for a section called "Tax Forms" or sometimes "1098-T Electronic Consent." Schools were required to make them available by January 31st. If you can't find it online, contact your school's bursar or student accounts office - they're the ones who generate these forms. Sometimes they're in weird places like the financial aid section rather than where you'd expect.
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