1098-T Tuition Statements…What you always wanted to know

1. 1098-T Tuition Statements…What you always wanted to know NYSOBBA 2013 Sally Luton—Onondaga CC Kara Simmons—St. John Fisher College Colleen DeGouff-SUNY Cortland

2. What is a 1098-T? The 1098-T is a tuition statement which must be provided by eligible educational institutions for each student you enroll for whom a reportable transaction is made. Insurers must report reimbursements of qualified expenses (box 10).

3. Format and Timing • 1098-T’s may be sent hardcopy or electronically • Campus must be able to document opt in for electronic statements • Forms must be sent to students by January 31 for the previous calendar tax year

4. Why is the 1098-T required? • 1098-T’s are a requirement of the Taxpayer Relief Act of 1977 (TRA97) and is necessary for students to claim the: • American Opportunity Credit • Lifetime Learning Credit • Hope Credit was discontinued

5. American Opportunity Credit

6. American Opportunity Credit cont’d.

7. American Opportunity Credit cont’d • Who cannot claim the credit? • Someone claimed as a dependent on another’s return • Nonresident aliens who did not elect to be treated as resident aliens for tax purposes • Someone who has used the same expenses to claim a deduction • Expenses were paid entirely with tax-free educational assistance • You or someone else received a refund of all the expenses • Your status is married, filing separately

8. Lifetime Learning Credit

9. Lifetime Learning Credit cont’d

10. Eligible Educational Institution College, university, or vocational school, or other postsecondary educational institution that is described in section 481 of the Higher Education Act of 1965 as in effect on 8/5/97 and is eligible to participate in the DOE’s student aid programs. This includes most accredited public nonprofit, and private postsecondary institutions.

11. When don’t you report? Courses for no academic credit Nonresident alien students, unless requested Students whose qualified tuition and expenses are fully paid or waived with scholarships Students for whom you do not maintain a separate financial accountand whose qualified tuition and related expenses are covered by a formal billing arrangements between the institution and the student’s employer or government entity. (VA or DOD)

12. Options for Reporting • Payments received for qualified expenses (box 1)OR • Billed Charges, Scholarships & Grants • Report the aggregate amount of qualified tuition, and expenses during the calendar year (box 2) AND • Report the aggregate amount of scholarships and grants received for an individual’s cost of attendance the institution administered and processed during the calendar year (box 5) • Adjustments (refunds or reductions in charges) made during the calendar year to payments received, or amounts billed for qualified expenses reported in the prior calendar year • Once selected, IRS must approve any method change

13. What is Reported on the 1098-T • Qualified education expenses paid for you, spouse, or dependent (for whom you claim an exemption) • Tuition and related expenses that are required for enrollment or attendance at an eligible institution • Student activity fees and expenses for course-related books, supplies, and equipment if the fees must be paid to the institution as a condition of attendance • What does everyone have to pay, without exception?

14. What’s NOT Qualified Expense • Amounts paid for any course or other education involving sports, games, or hobbies • unless the course or other education is part of the student’s degree program • or is taken to acquire or improve job skills • Room, board, insurance, medical expenses (including student health fees), transportation, and similar personal living, or family expenses

15. Charges Presenting Difficulty • International Program Charges when TAP is involved • TAP regulations require that tuition be paid to the institution certifying TAP • May affect student TAP eligibility • Computers • Only if required as condition of attendance

16. Scholarships & Grants • VA benefits, including those for Chapter 33 recipients • Pell, TAP, SEOG, or other grants processed for the student • Private scholarships • Foundation scholarships • TEACH grants • Nontaxable scholarships and grants • Generally includes payments received from all 3rd party sources • not loans or direct payments from student or their family

17. What’s NOT a Scholarship/Grant? • Aid for which the student receives a 1099 or W-2 • Americorps • Loan proceeds • Sub, Unsub, Plus, Alternative Loans • Scholarships or grants restricted to non-qualified expenses • RA waivers • Appointment to/payment at military academy • Direct payments from student or family members

18. Additional Requirements • Student’s permanent address • Temporary address may only be used if the permanent address is unknown • Information contact and service provider name address and phone number • Who filed the form • Who may answer questions • Cannot be general campus number

19. Boxes on the form • Box 1-Payments received for qualifying expenses • Box 2-Amounts billed for qualifying expenses • Box 3-Checkbox for change of reporting method • Box 4- Adjustments made for prior tax year done in current year • Reimbursements or reductions of qualified expenses (box 1 schools) • Reductions of charges (box 2 schools)

20. Boxes on the form cont’d. • Box 5-Scholarships and grants for current year • Box 6-Adjustments to scholarships and grants for prior year • Box 7-Checkbox for amounts included for periods starting in Jan-Mar of following tax year • Box 8-Checkbox for at least half-time student • Must meet HEA 34CFR sect. 674.2(b) • Student was half-time for any academic period

21. Boxes on the form cont’d. • Box 9-Checkbox for Graduate Student • Checked if student was enrolled in graduate program • Can affect tax credits • What to do if student is grad for only half of the year • Send letter upon request • Student documentation • Box 10-Insurer contract reimbursements or refunds

22. Helpful Resources IRS website: www.irs.gov Instructions for Forms 1098-E and 1098-T Publication 970 NACUBO website: www.nacubo.org

23. Questions? Thank you!