IRS Form 1098-T: Tuition Statement

What Is a Tuition Statement?

When you have to pay your own school tuition, it’s time to sort-out your tax documents to find where you can get the most refunds. You might be familiar with tax documents like Form W-2, Form 1040, and Form 1099, but if you recently took out a student loan, you’ll receive Form 1098-T, Tuition Statement. Your tuition statement gives you details about educational expenses and gives you the opportunity to obtain tax credits and deductions. Colleges and post-secondary educational institutions are required to send these to students each year. If you obtain a tuition statement in the mail, choose the tax experts at Community Tax to take advantage of deductions and credits. We understand that tuition is expensive, but with one of our professionals by your side, you can earn money back to help build a positive financial future.

What Is Form 1098-T?

If you are a student who pays for your own education, or you’re a guardian claiming a student as a dependent, you can expect to receive Form 1098-T. The tuition statement is issued by the Internal Revenue Service, and it contains important information about educational expenses. This form determines whether you’re eligible for certain tuition-and-fees tax deductions or other tax credits. If you or your student attends a college, university, or vocational school, you should receive Form 1098-T to help file your taxes and keep in your records. Your school is required to send you a tuition statement each year you attend.

What Information is Included On a Tuition Statement?

The tuition statement is only one page, with a red copy that is sent to the IRS, and a black copy that is sent to the student or other recipient to keep in their records. The form contains ten lines that require the institution’s tax information as well as the student’s. It also includes tuition payments billed and received, and any scholarships that were granted to the student. The tuition statement will show any adjustments made to the previous year’s Form 1098-T, and a box to signify whether the student is part time or pursuing a graduate degree.

What is qualified as an educational expense?

Qualified educational expenses include tuition, enrollment fees, and course expenses that the student had to pay for their classes. Even if a parent or guardian paid for these expenses, the student is still able to claim credit if the expenses are in their name and they aren’t claimed as a dependent.

Schools are required to report these qualified expenses to you and to the IRS. They can record your qualified expenses in two different ways. Some schools base expenses on how much the student paid during the school year, and others determine expenses based on how much the school was billed. Schools generally keep the same reporting method every year, but if it changes, you’ll find a check mark in Box 3.

What Isn’t a Qualified Educational Expense?

Not every expense receives a tax credit, including:

• Application fees
• Processing fees
• Money paid for courses involving extracurricular activities, unless it’s part of a degree program or job skill training
• Room and board
• Insurance
• Books and other course materials
• Medical insurance
• Transportations
• Other personal costs

While these expenses aren’t tax-deductible, earning money back can help offset the costs of attending school. If you’re unsure what you can and can’t claim, reach out to Community Tax and one of our tax experts will help you decipher what can be claimed as an educational expense.

What If I Received a Scholarship In the Past Year?

If you received a scholarship from the institution to help fund your education, your scholarship is typically considered a part of your gross income. Scholarships are generally tax-free if you are pursuing a degree and the awarded amount is used to pay for tuition, required fees, and materials. Any amount that’s awarded as a stipend for living expenses like room and board is considered taxable. There are also a variety of coordination restrictions that restrict people from taking too much advantage of education tax benefits. To learn more about whether your scholarship is taxable, contact your institution’s finance department and consult a professional from Community Tax to help maximize your tax deductions.

Can Community Tax Help Me with my Taxes?

Yes! Our licensed tax advocates have helped over 100,000 clients prepare their taxes and resolve tax issues. Whether you want to take advantage of tax deductions for your education expenses or you need to get out of tax debt, our professionals are standing by to help you reach your financial goals.

Choose Community Tax when you’re ready to take back the reins of your finances. We understand that it’s difficult to pay for tuition and fees if you’re a student, which is why we want to help you earn back as much money as possible. It’s never too early to plan for tomorrow. Start building the foundation of your financial future now with tax services from Community Tax. We can help you understand your taxes, file your taxes for you, and help you save big during tax season. Learn the ins-and-outs of taxes with the professionals at Community Tax.