Entering 1098-T information – scholarships, fellowships, and qualified education expenses – into TurboTax is very straightforward. The software should prompt you through the process fully under the ‘Deductions and credits’ section, or you can follow the steps below.
1. Under ‘Setup,’ choose ‘College expenses/tuition’ and then press ‘Continue.’
2. Choose the ‘Federal Taxes’ and ‘Deductions and credits’ tabs and then press ‘Continue.’
3. Then, press ‘Start’ to enter your 1098-T information.
4. Select ‘yes’ to enter your higher education expenses.
5. Click through the next four screens, entering your proper educational information, and concluding with reaffirming that you want to enter your 1098-T into the software.
6. Now, replicate your 1098-T information exactly in the software. In this example, I am using both the fellowship and scholarship income and the qualified education expenses for the hypothetical grad student. If the fellowship stipend were not reported on the 1098-T, the amount in Box 5 would be only slightly larger than the amount in Box 2.
7. Click through the next four screens, entering your proper educational information. I selected that the income the hypothetical student reported on the 1098-T is not duplicated elsewhere on the tax return, like on a W-2 or 1099-MISC.
8. The next section is where you need to enter additional qualified education expenses such as required textbooks. The hypothetical grad student doesn’t have any, but you might.
9. In this step, TurboTax verifies that you entered your scholarship income (Box 5 on the 1098-T) correctly.
10. Sometimes universities bill qualified education expenses in a different semester from when they post the scholarships to pay for them. TurboTax asks in the next step if that is the case for your 1098-T, because the bill and scholarships can be pulled into the same tax year. The hypothetical student’s 1098-T doesn’t have this issue, but consider if yours does (e.g., the amount in Box 2 is approximately double that in Box 5 or vice versa).
11. TurboTax asks if you used your scholarship income for room and board and other non-qualified education expenses. The hypothetical student did not, but your answer could easily be yes. (I tried answering this both ways, and the result was the same for my example.)
12. Click through the next three screens, entering your proper educational information.
13. TurboTax pauses for a summary page in case you have more student information to add.
14. TurboTax concludes that the hypothetical student can’t claim an education tax deduction or benefit. That is what we expected because the purpose of this 1098-T was to enter net non-compensatory pay rather than get a tax break.
Check: Under tabs ‘My Account’ and ‘Tools,’ click ‘View Tax Summary’ and ‘Preview my 1040’ to verify that the income you entered was added to the correct line on your tax return. In this example, TurboTax generated a 1040A.
Parent post: Grad Student TurboTax Guide: 2015 Edition
We at Grad Student Finances are not tax professionals, and none of the content in this section should be taken as advice for tax purposes.
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