There's no specific field to enter scholarships, fellowships, or grants received on a Form 1098-T box 5. But nontaxable scholarships may reduce the amount of education expenses eligible you're eligible to claim for education credits, and the tuition deduction, and taxable scholarships need to be reported as income. See to determine whether the scholarship is tax-free, then follow the steps below that apply.
To enter an adjustment for tax-free scholarships:
- Go to Screen 38.1, Education Credits/Tuition Deduction.
- Scroll down to the Current Year Expenses subsection.
- In the Qualified tuition and fees (net of nontaxable benefits) field enter the net amount of 1098-T box 1, and 1098-T box 5.
To report a taxable scholarship as income:
- Go to Screen 14.1, SS Benefits, Alimony, Miscellaneous Inc.
- Scroll down to the Alimony and Other Income section.
- Enter the taxable part in Taxable scholarships and fellowships.
Lacerte will include this amount on Sch 1 (Form 1040) line 8r and on Form 1040 line 8.
For tax year 2021:
- Tuition and Fees Deduction (Form 8917) has been repealed starting in Tax Year 2021.
- American Opportunity Credit & Lifetime Learning Credit (Form 8863) changes:
- Expanded Lifetime Learning Credit to phase outs that mirror American Opportunity Credit in 2021
- MAGI phase out range --$160,000 --$180,000 married filing joint; $80,000 --$90,000 other filers
