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The Dastardly 1098T Form

The Dastardly 1098T Form. A Quick Insight from the Bursar Side of the House Laurelle Swan, Vice President, West Coast Region, ECSI December 10, 2012. 2012 CASFAA Annual Conference. December 8 – 11, 2012 Anaheim, CA CASFAA Annual Conference. What is the 1098T Document?

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The Dastardly 1098T Form

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  1. The Dastardly 1098T Form A Quick Insight from the Bursar Side of the House Laurelle Swan, Vice President, West Coast Region, ECSI December 10, 2012 2012 CASFAA Annual Conference December 8 – 11, 2012 Anaheim, CA CASFAA Annual Conference

  2. What is the 1098T Document? • Used by eligible educational institutions to report information about their students to the IRS • Required by the TaxPayer Relief Act of 1997 • Reports amounts pertaining to qualified tuition and related expenses, scholarships, and grants • What is the student supposed to do with the 1098T? • This is an informational form • Serves to alert students that they may be eligible for federal income tax education credits Purpose of the 1098T Form 2012 CASFAA Annual Conference December 8 – 11, 2012 Anaheim, CA CASFAA Annual Conference

  3. Key Critical Dates • 1098T must be delivered by January 31 • Data must be submitted to the IRS by March 31 • Corrections must be completed between February 1 through March 31 • In-House Processing vs. Outsource Processing: Six Critical Steps • File processing – gathering all fees in the appropriate categories • Validation of the data gathered during file processing • Loading the 1098T form with data gathered • Re-validation of the data loaded into the 1098T form • Printing of the 1098T form, whether paper or electronic • Mailing/delivery of the 1098T form Process for Issuing 1098T Forms 2012 CASFAA Annual Conference December 8 – 11, 2012 Anaheim, CA CASFAA Annual Conference

  4. 1098T Form for 2012 A 2012 CASFAA Annual Conference December 8 – 11, 2012 Anaheim, CA CASFAA Annual Conference

  5. Box 1 - Payments Received for Qualified Tuition and Expenses • Pros • Reports in a way that most taxpayers claim (cash basis) • Reports in the year that installments are paid • Cons • May be harder to track and therefore report • Must also track refunds • Box 2 – Amounts Billed for Qualified Tuition and Expenses • Pros • Reporting can be easier for the university • Most schools are post-pay so it follows business process • Cons • Reports in a way that makes the taxpayer “calculate” their deduction • Cross of tax years’ confuses taxpayers (spring billing in Nov/Dec) Box 1 or Box 2 2012 CASFAA Annual Conference December 8 – 11, 2012 Anaheim, CA CASFAA Annual Conference

  6. Box 4 – Adjustments made for prior years • Shows any refunds during the current year for payments reported on a 1098T for a prior year • Refunds may be the result of changing from full-time to part-time, non-resident to resident classification, or cancellation/withdrawal • Box 5 – Scholarships or Grants • Shows the net amount of certain forms of educational assistance that were received or applied to the student account during the tax year • Box 6 – Adjustments to scholarships or grants for a prior year • Shows amount of scholarships or grants that were reported on a 1098T for a prior year that were adjusted or reduced in the current year Boxes 4 - 6 2012 CASFAA Annual Conference December 8 – 11, 2012 Anaheim, CA CASFAA Annual Conference

  7. Box 7 – Payments received in Box 1 include Pre-Paid Regular Session Fees • Prepaid fees are those paid during the tax year for a quarter beginning in the first 3 months of the following tax year • Box 8 – Enrolled at least half-time • This box indicates if the student was considered to be enrolled at least half-time for one or more quarters • Box 9 – Enrolled in a graduate program • This box indicates if the student was enrolled in a graduate program for one or more quarters during the tax year Boxes 7 - 9 2012 CASFAA Annual Conference December 8 – 11, 2012 Anaheim, CA CASFAA Annual Conference

  8. Truncation • Pilot years are 2011 and 2012 • No application to pilot, OK to just truncate • Require a SSN • Students must provide the university an SSN • University must attempt to get an SSN or TIN each year • University must still file a 1098T without the SSN • “Filler” SSN • 000-00-0000 or 999-99-9999 • OK to report to IRS so long as you attempt to get an SSN from the student Social Security Numbers 2012 CASFAA Annual Conference December 8 – 11, 2012 Anaheim, CA CASFAA Annual Conference

  9. International Students & ITINS • Non-Resident Alients • Not required to provide 1098T UNLESS it is requested • International Students • Not required to provide 1098T but not prohibited • TINS • You can replace blank or “false” SSN with TIN if it has been collected from the student 2012 CASFAA Annual Conference December 8 – 11, 2012 Anaheim, CA CASFAA Annual Conference

  10. Veteran’s Chapter 33 & Other 3rd Party Sponsors • Must be reported in Box 5 • Third party sponsorship or scholarship? • Any university administered payment must be reported • How does the Bursar’s Office work with the Financial Aid Office to accomplish this? 2012 CASFAA Annual Conference December 8 – 11, 2012 Anaheim, CA CASFAA Annual Conference

  11. Qualifying Expenses • Generally means tuition and fees required for enrollment or attendance • Exceptions for sports, hobbies or games, unless it is part of a degree program • Non academic fees – term does not include student activity fees, athletic fees, insurance expenses or other expenses not related to an individual’s academic course of instruction 2012 CASFAA Annual Conference December 8 – 11, 2012 Anaheim, CA CASFAA Annual Conference

  12. IRS Audits of Students • Cash basis filers can only deduct the amount paid • They are rejecting the deduction because the 1098T cannot be the documentation to substantiate the deduction • Encourage student to retain cancelled checks, bank statements and credit card receipts 2012 CASFAA Annual Conference December 8 – 11, 2012 Anaheim, CA CASFAA Annual Conference

  13. Issues your colleagues are grappling with: • Parents questioning how the institution generates and processes billing and financial aid disbursements which result in a timing difference for 1098T reporting • Students receiving 100% of qualified tuition and fees from a third party • What is included in “Financial Assistance”? Employer educational benefits? AmeriCorps? Veteran’s Benefits? • Are VA benefits a “benefit” or a “scholarship or grant”? • What does “administered and processed” mean? 2012 CASFAA Annual Conference December 8 – 11, 2012 Anaheim, CA CASFAA Annual Conference

  14. Thank you! For additional information, please SEE YOUR BURSAR 2012 CASFAA Annual Conference December 8 – 11, 2012 Anaheim, CA CASFAA Annual Conference

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