My SIL had a few questions about the 1098-Ts that she received for grad school. I am trying to help her out, but want to see if anyone has any insight since I've never dealt with these before.

She attended grad school on a full scholarship + $14,000 stipend. She took one semester in 2016 and one semester in 2017. It appears like they listed the amount of her tuition and fees for both semester in 2016 (because the dept charges the spring 2017 fees in Dec 2016), while the stipend and the scholarship amounts are split between 2016 and 2017.

For example, her 2016 1098-T has 28,000 in box 2 (14,000 tuition & fees x2) and 21,000 in box 5 (14,000 scholarship + 7,000 stipend). Her 2017 1098-T only has 21,000 in box 5 (14,000 scholarship + 7,000 stipend).

Am I correct in telling her that she only needs to report and pay taxes on the stipend amounts since the tuition & fees and the scholarship are a wash? This would be Line 7 of the 1040, correct? It seems to me that it's just a weird timing issue on the forms because universities do school year vs calendar year for the tax payer.

I believe you are correct regarding the part that is taxed, but I think you must report all of it on her form. For undergrads, when the amount of scholarships exceeds tuition, they have to report all of it then subtract the tuition etc and pay tax on the excess. The IRS had my student write it in adjacent to the line (doing this from memory) and write SCH or something like that with the amount. It was on the IRS website and I confirmed via telephone.

Your situation sounds trickier, so if you haven't combed through the website, you may wish to do so. If I have time, I will look through our old forms and see exactly how they told us. I don't think graduate is all that different, and maybe I am misunderstanding your explanation, but definitely the way schools disburse makes taxes complicated.

Also, our student used the 1040EZ and that may have made it easier for us.

I am not a tax preparer though, so take it for what it's worth!

Thanks - so you think it would make sense to report the tuition and fees for Spring 2017 semester in box 2? That's kinda how I saw it too.

I know a lot of these questions are answered by payroll services. They have a fairly comprehensive FAQ on the 1098-t