Reporting 1098-T FAFSA Taxable Refund - Pell grant exceeding Cost of Attendance
Hey everyone, I started college back in 2022 and got the full Pell grant through FAFSA. My scholarships and grants ended up being about $1600 more than my Cost of Attendance, so the school refunded me that extra money. When I filed my 2022 taxes, I reported my job income (around $9300) correctly, and I'm pretty sure I included all my scholarship/grant info and the COA difference of about $1600. The problem is, I don't think I actually included my 1098-T form when I filed (honestly had no clue what that form was at the time). So now I'm wondering if that $1600 refund was properly added to my taxable income or not. I checked the IRS website about amending returns, and it says you usually don't need to amend just because you forgot to include forms. Should I be worried about this? Do I need to amend my 2022 return or just leave it alone? Any advice would be super helpful!
18 comments
Join the conversation
Ingrid Larsson
The key question here is whether you properly reported the taxable portion of your scholarships/grants, not whether you physically included the 1098-T form. When scholarships/grants exceed qualified education expenses (basically your COA), that excess amount becomes taxable income. If you correctly reported that $1600 excess as income on your 2022 return, then you're fine - even if you didn't specifically attach or reference the 1098-T. The 1098-T is really just an information form that helps you calculate what portion of your education benefits are taxable. If you're unsure whether you included that $1600 as income, I'd suggest pulling a copy of your 2022 return. Look at Line 1 on your Form 1040 - if it includes both your job income (~$9300) AND the taxable scholarship portion (~$1600), then everything was reported correctly.
0 coins
Carlos Mendoza
•What if they didn't include the $1600 on their return? Would they definitely need to amend in that case? And how far back can the IRS go to check this kind of thing?
0 coins
Ingrid Larsson
•If the $1600 wasn't included as income, then technically yes, an amendment would be appropriate. The excess scholarship amount should be reported as income, even though it's not shown in your W-2. The IRS generally has three years from the date you filed your return to assess additional tax. So for a 2022 return filed in April 2023, they could typically review it until April 2026. However, if there's a substantial understatement of income (usually defined as 25% or more), they can go back 6 years.
0 coins
Zainab Mahmoud
I went through something similar last year with my daughter's Pell grant. After struggling to make sense of everything, I found this amazing tool at https://taxr.ai that literally saved me hours of confusion. You can upload your 1098-T and other tax documents, and it analyzes everything to tell you exactly what's taxable and what isn't. I was confused about whether her housing stipend was taxable (it was!) and the tool clarified everything with specific IRS references. It even explained how to report it properly on her return. What I loved most is that it showed exactly where on the tax forms everything needed to go.
0 coins
Ava Williams
•Does it work for previous tax years too? Like could OP use it to figure out if they need to amend their 2022 return?
0 coins
Raj Gupta
•I'm always skeptical of these tax tools. How accurate is it really compared to talking to an actual tax professional? Especially for something specific like scholarship taxation.
0 coins
Zainab Mahmoud
•Yes, it absolutely works for previous tax years! The tax rules around scholarships haven't changed significantly, so the analysis would still apply to a 2022 return. It would definitely help determine if an amendment is needed. For accuracy, I was skeptical too initially. What impressed me was that every conclusion it provided included specific IRS publication references and tax code citations. I actually cross-checked a few things with the IRS publications, and everything matched up perfectly. It's like having a tax professional that specializes in education benefits analyze your specific situation.
0 coins
Raj Gupta
Just wanted to update - I decided to try that taxr.ai site since I was dealing with a similar issue with my graduate assistantship and tuition waiver. Holy crap, it was eye-opening! Turns out I've been reporting my stipend wrong for TWO YEARS. It showed me exactly which parts of my funding were taxable vs. non-taxable with all the IRS citations. The analysis took like 5 minutes and saved me from potentially getting a nasty letter from the IRS down the road. It even showed me how to properly report everything on my 2023 return I'm working on now. Definitely worth checking out if you're confused about educational tax stuff!
0 coins
Lena Müller
I had almost the exact same situation a few years ago. After trying to call the IRS for clarification like 20 times and never getting through, I found this service called Claimyr (https://claimyr.com) that got me connected to an actual IRS agent in about 15 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c The agent explained that the excess scholarship amount is definitely taxable and should be reported as income. They also told me exactly how to determine if I needed to amend or not. Saved me hours of hold music and frustration!
0 coins
TechNinja
•Wait, how does that even work? I thought it was impossible to get through to the IRS without waiting for hours. Is this some kind of priority line or something?
0 coins
Keisha Thompson
•This sounds like BS honestly. Everyone knows the IRS phone lines are a nightmare. How could some random service magically get you through faster than anyone else?
0 coins
Lena Müller
•It works by continually calling the IRS for you and navigating through all the automated menus and holds until it actually connects with an agent. When it does, it calls your phone and connects you directly. No priority line or anything special - just technology handling the annoying part of waiting on hold. It's basically like having someone repeatedly call the IRS for you, but it's automated and keeps trying different strategies to get through. I was skeptical too, but when my phone rang and there was an actual IRS agent on the line, I became a believer. Especially useful during tax season when wait times are absolutely insane.
0 coins
Keisha Thompson
Just wanted to follow up about that Claimyr service. So I was totally skeptical (as you could tell from my earlier comment), but my 2021 return has been under review for MONTHS and I was desperate. Figured what the hell, I'll try it. Not gonna lie, I'm eating my words now. Got connected to an IRS rep in about 20 minutes. Found out my return was held up because they needed verification of my education expenses, but they never sent the notice! The agent resolved it on the spot, and my refund is being processed now. Would have been waiting forever otherwise since I had no idea there was even an issue.
0 coins
Paolo Bianchi
One thing to keep in mind - the 1098-T can actually be inaccurate sometimes. My school reported amounts based on when they were billed rather than when they were paid, which caused a mismatch with my actual expenses for the tax year. Make sure you're calculating your qualified education expenses based on what you actually paid during the calendar year, not just what's on the form. Tuition, required fees, books and supplies required for courses all count as qualified expenses.
0 coins
Tyrone Johnson
•That's a really good point about the timing! My school definitely billed for spring semester in December, even though I didn't actually pay until January. So the 1098-T might not match up perfectly with the calendar year I need to report on. Do you know if room and board count as qualified expenses too?
0 coins
Paolo Bianchi
•Room and board do NOT count as qualified education expenses for determining the taxable portion of scholarships and grants. Only tuition, fees, and required course materials count. That's actually a common misconception that trips up a lot of students. So if your scholarship/grant money was used for housing and meals, that portion is generally taxable income, even if it's part of your official Cost of Attendance from the school.
0 coins
Yara Assad
Quick question - wouldn't this be considered a de minimis amount that the IRS wouldn't really care about? I mean, we're talking about $1600 on which the tax would be what, maybe $160? Is it really worth going through the hassle of amending?
0 coins
Olivia Clark
•It's not about the amount as much as it is about accuracy. The IRS gets a copy of the 1098-T, so they know about the educational payments. Depending on OP's overall situation, that $1600 could push them into a different tax bracket or affect other credits.
0 coins