Education Credits

[Questionguy101]

So they give you a Form-1098T for the Education credits. But 95% of the time the school only puts a figure on box 2 under "amounts billed for qualified tuition and related expenses". Do you just go ahead to use this number for their education credits?

[Gretel]

No, no, no. You always need to get the actual detailed records from the school and the taxpayer to determine the eligible expenses.

This subject comes up numerous times every tax season and I am sure you will find plenty of postings in the past.

[Lion]

No

No. You really need the student's transcript of payments and billings to see what they actually paid and when and for which year. Once in a while it's actually included with the Form 1098-T to the student, but mostly the student gets it online from his burser's office or where ever. Lacking that, if the student (or his parents if paying for their dependent) can tell me their tuition payments and that tells the whole story, I can use that. But, with loans and scholarships and other complications like were the loans in the parents' name or student's and knowing how much was tuition vs room & board.... Start by asking your client how much they paid and for what.

[FEDUKE404]

A loud AMEN!!

....This subject comes up numerous times every tax season and I am sure you will find plenty of postings in the past.

This "horse" has been beaten to a pulp* on the discussion boards.

In summary: The Form 1098-T is basically a worthless piece of paper..........

FE


*Go to the topic listings, look for "Search," then "Search Forums," and enter something like "Form 1098-T" in the box

[Davc]

In summary: The Form 1098-T is basically a worthless piece of paper..........

FE

Only if you insist on that fancy "facial quality" stuff.

[Snaggletoof]

Not Worthless

The Form 1098-T is basically a worthless piece of paper..........

It is not worthless because "something is better than nothing." Not that I would have you believe for a minute that the form is accurate.

We as preparers are not blessed with a perfect world and have to resort to estimates more often than we would like. In the case of the 1099-T, the information is horribly poor but more often than not gives the preparer a better idea of what has been spent than what the client does.

Yes, we are supposed to measure the "school year" as the archaic Fall-to-Summer cycle instead of the calendar year, and also the archaic traditional classification of Freshman, Sophomore, etc. There is no consistency from one school to the next as to what constitutes their "year" for 1099-T purposes, also their measurement of what constitutes a full-time/part-time student, nor what constitutes a "qualifying" expenditure. They often measure what is billed rather than what the taxpayer has actually paid. Nightmares galore. But it is "something", and often the client will give you "nothing" or worse still, something that is even more inaccurate.

Another advantage to using the 1099-T: If they are sending the "Red" copy to the Govt, then using the 1099-T numbers do not create a difference under the IRS "matching" program. Ignorance can be bliss and at least the school and the IRS can be blissfully happy together and not send an ugly letter to the taxpayer.

[dtlee]

Especially not worthless in NY

Apparently, New York State now requires the EIN of the college for their Tuition benefits. In most cases, the easiest way to obtain that is from the 1098-T.

[BOB W]

I found 1 web site with the Fed ID#, St Joseph's of Patchogue, the rest I had to call, about 4 so far. They gave it up readily..........

[FEDUKE404]

Terminology change

OK, I shall go from "worthless" to "of minimal usefulness," including consideration of no loyalty to any facial quality stuff.

Earlier today I had to trudge through some education expenses (reality vs that reported on Form 1098-T).

I love the amounts "billed" choice, which is prevasive. As a tax person, I care about what was PAID, which is generally blank on the tax document. It's not unlike the routine you have to go through with a client who has an invoice from the doctor....ah, let's hear about the insurance payments, and write-downs, and then show me a receipt for your actual payment instead.

And another recent Form 1098-T issue was a scholarship that was finally credited to the student's account the first week in 2010. All of the expenses for the relevant semester were paid in December of 2009 (and already reduced by the scholarship amount) and then used for allowable education credits for tax year 2009.

I guess, in theory, since the student is now graduated the IRS may come looking for that "scholarship income" for tax year 2010? Or maybe the IRS also chooses just to ignore all Forms 1098-T?? Alas.

FE

[BP.]

As a tax person, I care about what was PAID

A "worthless" technique, I mean of "minimal usefuleness" in my experience.
People reply, I didn't "pay" any tuition. They don't grasp that borrowed funds count toward the credit.

(I love all the text formattings in your posts )