1099 Tax Software Blog

Form 1098-T is used by eligible educational institutions and is filed for each student for which a reportable transaction is made. Form 1098-T does not have to be filed in the case that the student does not obtain academic credit from their course. If the student is a non-resident alien the form also does not need to be filed unless the student requests it. Students who have their tuition and other expenses waived or who have their education completely paid for with scholarships and grants do not need to have a 1098-T form filed as well.

Form 1098-T reports amounts billed for tuition and related expenses by educational institutions.The form must be filed by eligible educational institutions for qualified students that the institution bills for tuition and related expenses. Institutions that are a part of a governmental unit are also required to file the form. The same reporting method is expected to be used for all calendar years except in the case that the IRS offers the institution the ability to change their reporting method. Insurers that are in the business of reimbursing or offering refunds for qualified tuition and related expenses are also required to fill a Form 1098-T for each student.

Eligible educational institutions are classified by Section 481 of the the Higher Education Act of 1965 that went into effect on August 5th 1997. Institutions include vocational schools, colleges, universities, or other postsecondary institutions. Most public, private, and non-profit institutions meet the classification of eligible educational institutions.

Qualified tuition and related expenses include any amount paid for a course. It does not include amounts paid for education relating to sports, hobbies, and games except in the circumstance that the course is a part of the student’s degree program or a part of his or her vocational training. Also, room, board, medical expenses, insurance, transportation, living expenses, and family expenses are not included.

Academic credit is defined by the IRS as the credit that is awarded to a student after the completion of a course that leads to a postsecondary degree or other type of educational credential. One Form 1098-T is required to be filled for every student enrolled in an institution for an academic period. Academic periods include semesters, trimesters, and quarters, or whichever particular type of period that the institution uses.

Form 1098-T is an information return used by educational institutions to report student information to the IRS. The form has information about the student including the student’s name, taxpayer identification number, address, academic status, and enrollment. The form also includes information about qualified educational expenses such as tuition and related expenses, and information on scholarships and grants that the student has received.

Every student that meets the reporting requirements for Form 1098-T must have an information return filed for them by their educational institution. A student can request a copy of their 1098-T from their institution and use the information to help them claim tax credits. The 1098-T information return does not have all of the information that is required to claim the credit, but it offers some of the required information.

Claiming the tax credit is not required by students. Students similarly are not required to file Form 1098-T but they may request a copy to help them apply for tax credits or have the information for their own financial records. The Hope Education Credit, American Opportunity Credit (an extension of the Hope Credit), and Lifetime Learning Credit are three educated related tax credits that students may qualify for.

Essentially, the credit is mostly to relieve the tax burden on parents and students who are not dependents of others who are paying for their own education. There are several requirements for the credit for both taxpayers and the student whose qualified expenses that the credit is being claimed for. Students may also claim the credit for their own taxes if they are not dependents of others.

Students can qualify for the Hope Education Credit if the meet certain requirements. The Hope Credit offers up to a $1650 tax credit for qualified students. The credit is claimed for expenses paid for by the taxpayer, the taxpayer’s spouse, or a dependent of the taxpayer.

The American Opportunity Credit extends the Hope Credit for up to $2,500 as a credit instead of $1650. The student for whom the credit is claimed can be enrolled up to 4 years instead of 2. Also, up to 40% of the credit is refundable. The American Opportunity Credit is available since the year 2009.