1098-T & CARES Act scholarships

[ungvarys]

Taxpayer is a full-time graduate student.  1098-T shows payments received (Box 1) $5,785.  Scholarships or grants (box 5) is $10,550.  So program is picking up $4,765 as taxa ble income.  $1,000 of scholarships was a CARES payment direct to school.  I read that theses CARES pyaments are not taxable? If so how do I show it?  Can I take some expenses against the taxable part since it was used for room & board and books, etc? 

[TaxGuyBill]

Books and other similarly required supplies can offset the taxable scholarships.  Room and board can not.

For the $1000 non-taxable scholarship, have you confirmed that Box 5 includes that amount?  Those non-taxable scholarships are NOT required to be listed in Box 5, so you need to confirm if it is actually in Box 5 or not.

If that non-taxable scholarship is in Box 5, I would consider adding $1000 of extra 'books' to make effectively make it non-taxable.

[ungvarys · Accepted solution]

Ty! Exactly what I was thinking. 😊