HPSP and taxes

[dnt0711]

I'm trying to do my taxes and I'm running into some HPSP issues. My school issued me a 1098-T to report my tuition expenses and scholarship/grant funds that the school received. My tuition was somewhere in the $70,000 range and the scholarships were about $74,000 I believe. I think the scholarship was slightly more since the Army paid for school billed health insurance or instruments or something like that. Either way it was a required school expense that the Army is okay with.

So basically my question is, how do I get out of paying taxes on this additional $4000 of "income", which was really just part of my scholarship benefits for approved expenses? Unfortunately the government will receive a copy of the 1098-T and there is no box on my taxes to check "HPSP student". I'm assuming I'm not the first person to have this issue.

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[The Dentisto]

BUMP. I'm wondering about this right now as I'm in the exact same situation. It appears that while the stipend is taxable, the scholarship portion may be non-taxable?

 

[chill45]

I ran into this problem last year but my difference was only about $120, not $4k!! I never figured it out though cause it wasn't worth the $10 it was costing me in taxes. I would suggest talking to your bursars office though and seeing where the discrepancy. The situation still perplexes me as how a school can bill you for a certain amount but the army/navy paid them a higher amount. I would definitely be interested to see what the $4k was for though. How they enter stuff in their system can be chaotic it seems.

 

[distressstudent]

I ran into this problem last year but my difference was only about $120, not $4k!! I never figured it out though cause it wasn't worth the $10 it was costing me in taxes. I would suggest talking to your bursars office though and seeing where the discrepancy. The situation still perplexes me as how a school can bill you for a certain amount but the army/navy paid them a higher amount. I would definitely be interested to see what the $4k was for though. How they enter stuff in their system can be chaotic it seems.

So are you saying the scholarship portion is taxable? Since it seems like you were on hook for $120

 

[Tooth Ferry]

This is a pretty tricky situation: I'd recommend reaching out to an accountant. It's rather unlikely that someone of dental student age would be audited by the IRS, but it's possible.

 

[chill45]

So are you saying the scholarship portion is taxable? Since it seems like you were on hook for $120

No the scholarship is not taxable, but the school was showing my expenses as (for example) $30,000 but that my scholarship paid $30,120 so the $120 was treated like income. So yes the $120 part was taxed but not the $30,000. It brought my return down about $7 so I didn't look that far into it.

 

[chill45]

So another bump to this thread. I'm filling out my taxes and my 1098 form is showing that the portion the Navy paid for my health insurance as part of my scholarship/grant but it's listed as a non-qualified educational expense on my 8863 form. This makes it seem like I got about $3,000 more in scholarships than I was billed for and knocking my refund down $500-$600. Anybody got any insight on how to deal with this?