1098 T
What your 1098-T means: Box 1 and Box 5, when scholarships are taxable, and a calculator for net qualified expenses and the education credit.
Form 1098-T calculator
What Form 1098-T shows
Colleges send Form 1098-T to students who paid qualified tuition and related expenses. Box 1 shows payments received for qualified tuition and related expenses, and Box 5 shows scholarships or grants. Other boxes flag adjustments to prior years and whether the student was at least half-time (Box 8) or a graduate student (Box 9).
Box 1 vs Box 5
Your education credits are based on qualified expenses minus tax-free scholarships. If Box 5 is bigger than your qualified expenses, the excess is generally taxable income to the student. Scholarships used for room and board are taxable too. Sometimes it pays to treat part of a scholarship as taxable so more tuition qualifies for the American opportunity tax credit; compare both ways.
The 1098-T is information only; you don't attach it to your return. Keep it with your receipts for books and supplies, which can count for the AOTC even though they aren't on the form.
Common questions
What is Form 1098-T?
A statement from your college showing qualified tuition payments (Box 1) and scholarships or grants (Box 5).
Is a scholarship taxable if Box 5 is more than Box 1?
The part that exceeds qualified expenses, or pays room and board, is generally taxable.
Do I attach Form 1098-T to my return?
No, keep it for your records.
Sources
More paycheck and tax calculators: 1095 A · 1095 B · 1099 B · 1099 C
Related
General information, not financial, tax or legal advice. Check important numbers with the official source before acting on them.