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Level 1

On form 1098-T, when the amount in Box 5, Scholarships is greater than Box 1 tuition, why does it reduce the amount of taxpayer's refund.  Is there a way to allocate some of the excess schol

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5 Replies 5
Level 11

Because the excess is income.

** I'm still a champion... of the world! Even without The Lounge.
Level 15
Level 15

Did you look at the 1040 and see that extra scholarship income being added to wages? 

You cant just look at a refund and wonder "why did it change?"  Follow the money!

Level 11
Level 11

Just be aware that the 1098-T includes scholarship that may cover a different year. You need to have your client check if all of scholarship was for the 2019 year. Also if a large amount of scholarship is taxable, you can have parents not claim student and file return with student claiming credit, and even if scholarship is taxable to her she probable will not owe tax. You need to look at all options, and not just put 1098-T on parents return

Level 15
Level 15

If its throwing the scholarship excess to wages, sounds like the TP is the student..its not a parents return, right?

Level 14

The taxable amount of the scholarship can be reduced if spent on  qualified educational expenses other than tuition.  

Qualified education expenses.


For purposes of tax-free scholarships and fellowship grants, these are expenses for:

  • Tuition and fees required to enroll at or attend an eligible educational institution; and

  • Course-related expenses, such as fees, books, supplies, and equipment that are required for the courses at the eligible educational institution. These items must be required of all students in your course of instruction.