Guide to Tax Form 1098-T: Tuition Statement
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Key points to remember
• Eligible post-secondary institutions must send Form 1098-T to tuition-paying students by January 31 and file a copy with the IRS by February 28.
• Schools use Box 1 of the form to report payments received.
• Box 5 shows the amount of scholarships and grants paid directly to the school for student expenses, which may reduce the amount of a student’s eligible expenses.
• A check mark in box 8 indicates that the student is enrolled at least half-time, while a check mark in box 9 indicates that the student is enrolled in a graduate program.
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What is Form 1098-T?
Tuition-paying students at eligible colleges or other post-secondary institutions should receive a copy of Form 1098-T from their school’s Internal Revenue Service each year. Eligible institutions include most colleges, universities, and vocational schools eligible to participate in Ministry of Education student aid programs. This form provides information on education expenses that may entitle the student, or the student’s parent or guardian if the student is still dependent, for education tax credits.
Who receives Form 1098-T?
Schools should send Form 1098-T to any student who paid “qualified educational expenses” in the previous tax year. Eligible expenses include:
- tuition fees,
- any registration fees,
- and course materials required for a student to be enrolled.
If someone else pays for these expenses on behalf of the student (such as a parent), the student still gets a “credit” for them and receives the 1098-T. Schools must send the form to the student by January 31 and file a copy with the IRS by February 28.
Declaration of eligible expenses
The education expense statement and Form 1098-T were updated in 2017, 2018, and 2019.
In 2017, schools could report a student’s eligible expenses in two ways: based on the amount actually paid by the student during the year or based on the amount billed by the school to the student during the year. of the year.
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- If the school declares the amount paid, it enters this figure in box 1 of the form. If he declares the amount invoiced, he does so in box 2.
- A school must generally use the same method of reporting each year. If he changes methods, which requires IRS approval, he checks box 3. This box is there primarily for IRS information, not the student.
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In 2018, the form was changed to reflect only amounts actually paid for eligible tuition and related expenses.
- Schools use Box 1 to report payments received.
- Box 2 is no longer used.
- Box 3 still had a checkbox to indicate a change in reporting method from amount charged to amount paid.
After 2018 with only one method available for the current year and the previous year, the checkbox to change method is no longer necessary, so box 3 is no longer used.
TurboTax Tip: Form 1098-T provides information about educational expenses that may entitle the student—or the student’s parent or guardian if the student is still dependent—for tax credits related to education.
Adjustments and scholarships
Box 4 of the form shows any adjustments the school made to eligible expenses reported on a previous year’s 1098-T. If it turns out that a previous year’s expenses were less than originally reported, the student may be liable for additional tax for that year.
Box 5 shows the amount of scholarships and grants paid directly to the school for student expenses. Scholarships and grants may reduce the amount of eligible expenses the student can use when calculating a credit.
Box 6 shows any adjustments the school has made to scholarships and grants reported on a previous year’s 1098-T. These adjustments may affect the student’s tax payable for the previous year, so the student may have to file an amended return.
Schools must check box 7 if the amount in box 1 or 2 includes expenses for a school term that begins within the first three months of the year following the year covered by the 1098-T.
A tick in box 8 indicates that the student is enrolled at least half-time.
A check mark in box 9 indicates that the student is enrolled in a graduate program.
Box 10 of the form is only used in cases where students have been reimbursed for costs under a “tuition fee insurance” policy. These policies reimburse students when they are forced to leave school – for medical reasons or family emergencies, for example – after paying non-refundable tuition fees.
- When an insurer reimburses a student’s expenses, it must provide that student with a copy of the 1098-T.
- The only box that is filled in is box 10, which indicates the amount reimbursed.
- The expense amount used to calculate credits should generally be reduced by any reimbursement reported here.
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