1098-T

[Chowdahead]

I get a lot of clients who receive a 1098-T Tuition Statement from their school yet Box 1 "Payments received for qualified tuition and related expenses" is blank.

There is usually an amount in Box 2 "Amounts billed for qualified tuition and related expenses."

Sometimes they will argue with me that they actually paid the amount in Box 2 or that they took out a loan to pay their tuition.

Are they allowed to claim the education credits based on the amount in Box 2?

[Pacun]

If they have proof of payment and otherwise qualify, yes.

[jainen]

>>Are they allowed to claim the education credits based on the amount in Box 2? <<

According to the instructions to Form 1098-T (at http://www.irs.gov/pub/irs-pdf/i1098et.pdf in case anyone besides me cares to actually read the instructions), "Eligible educational institutions may choose to report payments received, or amounts billed."

[Margaret CPA in OH]

University of Cincinnati is one of the apparently rare schools that actually lists the payments received, when and the source in a neat chart format. The columns show payments made with cash, credit cards, scholarships, loans, and grants to clearly identify the possible treatments of payments. (My husband is the designer of the student information system software and is director of that division - I think there is a link there...)

If clients provide only the 1098-T, I ask them to complete a similar chart. It can be enlightening.

[Pacun]

Keep in mind that as long as someone paid or is reponsible for any loans (no scholarships or grants), whoever claims the student's exemption is the one that gets the credit. Just having the 1098-T is not enough proof according to the IRS.

[grandmabee]

Keep in mind that as long as someone paid or is reponsible for any loans (no scholarships or grants), whoever claims the student's exemption is the one that gets the credit. Just having the 1098-T is not enough proof according to the IRS.

there is no matching on 1098 T from IRS either.

Credit is based on what is paid including what is paid thru loans

[Chowdahead]

Thanks for the replies. Yea, I realize that loans are a qualified expense as long as they are disbursed in 2009.

However, these local 1098-T are horrendously inaccurate. About 90% of them do not list anything in Box 1. They almost all list amounts in Box 2. They rarely include expenses paid by loan.

This is crucial because the American Opportunity Credit is a big credit to students, or their parents if they claim them.

But getting people to provide accurate information about their loans is a time-consuming process, that I am really going to start having to consider charging more money for because it is backing up my work.

[grandmabee]

most of my students I have go to their account online at the school and print out a summary of what was charged and what was paid. I don't care if it was paid my money or by loan proceeds as long as it was paid during the year. I find the 1098-t pretty useless except for scholarships. But with the summary I can see where the schools get the figures they put on the 1098-t

[Margaret CPA in OH]

I am trying to upload the form I mentioned. It may prove helpful to some.1098-TDocument.pdf

[kcjenkins]

Clearly the schools had better lobbyists than the parents did. That is how they got the 'option' to put in just what was billed rather than what was paid. Still, most schools DO have online 'accounts' that the student can access to see what he owes, has paid, etc. I just ask them to give me a printout from that to go with the form. If your local college or trade school does not, have your clients complain and make them give the student the info.