What is Form 1098-T?
Form 1098-T, Tuition Statement, is an Internal Revenue Service (IRS) form filed by educational institutions for each student enrolled and with whom a reportable transaction is made.
Transactions such as tuition and other such related education expenses are reported to both the student (or their parent/s) and the IRS using Form 1098 T. Depending on the nature of the expenses, students and parents may avail of education-related tax credits through filling out forms such as Form 8863, Education Credits. Such forms require information from the IRS 1098 T form.
Education expenses that are considered qualified for the filing of a Form 1098-T generally include tuition fees and the cost of course materials that a student must have to be enrolled at or attend an eligible educational institution. The following are not considered part of the qualified expenses that can be filed using Form 1098-T:
- 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.
- Charges and fees for room, board, insurance, medical expenses (including student health fees), transportation, and similar personal, living, or family expenses.
While IRS Form 1098-T generally must be filled out by educational institutions (or insurers engaged in the trade or business of making refunds or reimbursements of qualified tuition and related expenses), there are certain conditions and requirements that may remove the need for a person to file the IRS 1098-T form or simply do not require it at all. These exceptions are as follows:
- Courses for which no academic credit is offered, even if the student is otherwise enrolled in a degree program;
- Nonresident alien students, unless requested by the student;
- Students whose qualified tuition and related expenses are entirely waived or paid entirely with scholarships; and
- Students for whom a separate financial account is not maintained by the educational institution or insurer, and whose qualified tuition and related expenses are covered by a formal billing arrangement between an institution and the student’s employer or a governmental entity, such as the Department of Veterans Affairs or the Department of Defense.
If any of these conditions is true, then Form 1098-T IRS need not be filed. However, another IRS form may still be required depending on the circumstance, so it is best to make sure that you are aware of any and all other forms that must be filed besides Form 1098-T.
Who needs to use Form 1098-T?
All eligible educational institutions that are a governmental unit, or an agency or instrumentality of a governmental unit, are subject to the reporting requirements of Form 1098-T. A designated officer or employee of the governmental entity must satisfy the reporting requirements of Form 1098-T.
If another person receives or collects payments of qualified tuition and related expenses on your behalf, the other person must file Form 1098-T. However, if the other person does not possess the information necessary to comply with the reporting requirements of Form 1098-T, then you must satisfy the reporting requirements of Form 1098-T.
How to fill out Form 1098-T?
Form 1098-T is a very short and simple form to accomplish. It will be helpful to have any records of the transaction(s) concerned in order to ensure that all information entered in the form is correct and updated for the relevant transaction.
There are also multiple copies of Form 1098-T that must be filled out. The instructions written below apply to all copies of the form, but each form is used in different situations, so it is important to keep in mind which forms you are filling out.
Copy A is for submission to the IRS. It is important to remember that, in the case of Copy A of Form 1098-T, the form must be ordered from the IRS website, as copies of it found elsewhere are considered to be for informational use only and therefore not valid to scan and print.
Copy B is to be given to the student.
Copy C is to be kept by the person who filed Form 1098-T.
Make sure to keep in mind which copy you are accomplishing and to where or to whom it should be sent to.
Filer’s Personal Information
Enter the following information of the filer in the space provided:
- Full legal name
- Street Address
- City or Town
- State or Province
- ZIP or Foreign Postal Code
- Telephone Number
Filer’s Employee Identification Number
Enter the filer’s Employee Identification Number (EIN).
Student’s Taxpayer Identification Number
Enter the student’s Taxpayer Identification Number (TIN) as provided to you on Form W-9S, Request for Student’s or Borrower’s Taxpayer Identification Number and certification, or any other form with the student’s TIN.
Check the box provided if any of the following criteria have been met:
- The student’s TIN was solicited in writing (through Form W-9S or other)
- The student’s TIN was obtained in a prior year from their financial aid application or other form and in either case has no reason to believe the TIN previously obtained is incorrect.
- The institution is filing Form 1098-T with nothing in the field for the student’s TIN because the institution has no record of a TIN, and has made a written solicitation for the TIN on or before December 31 of the year for which Form 1098-T was filed.
Enter the student’s full legal name.
Student’s Street Address
Enter the current street address of the student.
City or Town, State or Province, ZIP or Foreign Postal Code
Enter the student’s city or town, state or provide, and ZIP or Foreign Postal Code.
Service Provider/Account Number
Provide the name, address, and telephone number of the service provider that filed the statement, if applicable.
If more than one 1098-T form is being filed for one person, enter the account number of the concerned transaction here.
Box 1 - Payments Received for Qualified Tuition and Related Expenses
Enter the total of all the payments received for qualified tuition and other related expenses.
Boxes 2 and 3 - Blank
Leave these boxes blank.
Box 4 - Adjustments made for a Prior Year
Enter the total of all adjustments made for the prior tax year. These adjustments may include the amount of payment that was reimbursed or refunded as relating to the qualified expenses, or the amount reduced from the amount charged for the tuition and other qualified expenses for any prior year after 2002.
Box 5 - Scholarships and Grants
Enter the total amount of any scholarships and grants that were administered and processed for the student’s costs of attendance.
Box 6 - Adjustments to Scholarships and Grants for a Prior Year
Enter the amount of any reduction to the amount of scholarships or grants that were reported for any prior year after 2002.
Box 7 - Checkbox (Academic Period)
If the amount entered in Box 1 includes amounts for an academic period beginning January to March 2022, check the box provided.
Box 8 - Checkbox (Half-time Student)
If the student was at least a half-time student during an academic period in 2021, check the box provided.
Box 9 - Checkbox (Graduate Student)
If the student is a graduate student, check the box provided.
Box 10 - Insurance Contract Reimbursement or Refund
If you are an insurer, enter the total amount of reimbursements or refunds of qualified tuition and related expenses that you made to the student during 2021.
Tips when filling out Form 1098-T
Form 1098-T contains some sensitive information, such as the filer and the student’s address. Thus, it is important to keep it in a safe and secure area and to send it to the correct person or persons through trustworthy means.
Make sure all information entered is correct and updated. This will help to avoid any issues with the information submitted to the IRS and allow students to properly file their own taxes and calculate their education credits as necessary.
Practice good contract management. Copy C of the form is meant for the filer to keep, so it is best to store it in a safe and secure area, or even to create another copy of the fulfilled form. This will be useful for possible future legal purposes, or even as a backup should something happen to the original copy.