Avoiding tax on "scholarship" on 1098-t?

[TheGadfly]

My wife works in the career services department of her graduate school for which she receives free tuition and a small stipend. In past two years, she was required to coordinate/attend three separate networking events in distant cities. Travel expenses for these trips were fully reimbursed by the University.

When she received her 1098-T, the total amount of her reimbursements ($2,342) was listed in box 5: "Scholarships and grants".

My understanding is that, because these trips were a condition of her job and only served the interest of the university, these reimbursements are NOT taxable. Still, I can't figure out how to avoid paying taxes on the $2,342 unless I enter this amount as her costs for tuition and fees. I am using TaxAct.

Any suggestions?

[NoStacheOhio]

Step one is to call the university and see if they can change it and give you a corrected 1098.

If that doesn't work, did you save receipts?

[BigRed]

I assume she is a full time graduate student and works at the career services department as a part-time job while completing her studies and that the tuition is covered as part of the job?

Are you sure the amount in Box 5 was for the trip reimbursement and not the amount of free tuition she received or the stipend?  What is the amount in box 1?

Second, the money she was reimbursed with may be from a specific grant, and that grant might be tax free.  She should check with the career services department to see if that is the case.

Last, I believe that you do not need to duplicate the 1098-T numbers for your taxes, as they may not represent the proper amounts, depending on which scholarship/grant funds are actually taxable and what expenses are actually qualified educational expenses.

[teen persuasion]

Those 1098t forms are notoriously incorrect.  If you have good documentation of the reimbursements, I would not use the erroneous data from the form. 

We are often trying to claim a small amount of scholarships as taxable income, to be able to claim education tax credits, but tax software wants to match up tuition and scholarship amounts in a way that is less optimal for us.  TurboTax has (in the past) had an option to correct the amounts.  H&R Block did not, and that made it impossible to correctly claim a credit we were eligible for.  Needless to say, we went back to TurboTax after that experience.  Of course, I'm using the SW just to efile.  I compute things beforehand to make sure the SW does things my way.

[BigRed]

In TaxAct (which we use) it does not necessarily pull the numbers straight from the 1098-T, there are opportunities to correct, and also a place to put addition qualifying educational expenses as well.  You can also go to the Forms Tab, and pull up the educational worksheet and simply plug in the right numbers.  I don't believe you can edit the entry on the 1040 directly, since it ends up in the W-2 wages line, but you should be able to go to that line and click the folder icon to pull up the supporting forms.

Hope that helps.

Also, what teen persuasion said - if you have your own records, just go by them.  I don't think what we've put in has matched the 1098-T ever in the 5 years of my wife's grad school.