<prompt> Human: Im paying 48k in tuition and getting 54k in grants, which takes my tax situation from a refund of about 300 to owing about 300. Even when I report the excess as going entirely to living expenses which it did, I still owe money.My brother-in-law told me I could just not report my 1098-T, but I dont want to risk getting in trouble with the IRS -- but I also dont want to pay an extra 300 on top of the 175 I already owe the state. Doesnt sound like a lot, but Im about to graduate and the unexpected added expense is going to cut into my savings way more than Im comfortable with  <response>: Grants that are in excess of your qualified education expenses are taxable income. When you enter this in tax software, you should see 6K getting added to your wages line. So the 6K increase in taxable income would cause a 600 increase in tax if you are in 10 tax bracket. It makes sense that your interim refund display changes from 300 to 300. IRS gets copy of your 1098-T too, so they know about it. There isnt really a good argument for not reporting it. 