Education Form 1099

[ruthc]

The 1099's I have seen don't list the payments. They only listed what has been billed and any grants, schlorships, etc. So when we have the college statement with the paymetns, how do we enter that on the tax form? I don't want to adjust the 1099. Would I just override the tax field to enter the paid amount?

[Super Mom]

You mean 1098??? I would just enter the correct tuition in the forms myself.

[ruthc]

Yes, 1098

Yes, sorry, I did mean the 1098. Thanks for the answer!!

[taxea]

I would have the TP get a correct 1098T from the college.

[Koss]

Form 1098-T

Data from Form 1098-T does not need to be entered into your software at all.

It is not transmitted to the IRS. It is not part of the electronic return.

The entries on From 8863 (or Form 8917) are what matters.

BMK

[Golden Rocket]

Bad Design

We have had a number of discussions about just how dysfunctional is the 1098-T. Does not list amounts paid, only amounts billed. Does not group the expenses into the school year as required by the Hope and Lifetime credits., etc. etc. etc.

The problem is that most of the time, you cannot rely on anything better. Almost always, the client's records are even worse and if you try to explain what you really need, their entire thinking blows a fuse.

Then consider that this is an information return, which by design is supposed to be part of the IRS "matching" program, and you might be invoking a disconnect if you don't follow the 1098-T. Makes an effective argument for just taking the 1098-T as is and working from it, even thought it may be wrong.

The real problems could be solved by an educational process for the schools to learn how to fill these @#$% things out. Or they could beat up on tax preparers, who are absolutely powerless to improve the methodology used by the colleges. Guess which course of action the IRS would prefer to pursue??

[taxea]

If they are required to submit this to the IRS then isn't there some instruction as to how to fill it out. I am ready to do some research on this because I am tired of it too. I will try to find the best avenue for a complaint and hope that you will all join me in submitting one.

I have the client get the proper info from the college. Without it I tell the client I can't report an incomplete 1098T.

[Koss]

Form 1098-T

Golden Rocket wrote:

Then consider that this is an information return, which by design is supposed to be part of the IRS "matching" program, and you might be invoking a disconnect if you don't follow the 1098-T. Makes an effective argument for just taking the 1098-T as is and working from it, even though it may be wrong.

That's not a good idea.

I had a client that went through a correspondence audit over a Form 1098-T. The institution had entered data in Box 2 but nothing in Box 1. There as a amount in Box 5 that was well below the amount in Box 2. This complies with IRS reporting requirements.

The client was maxed out on the AOC. He had paid well over $4000 in tuition and fees, after application of the scholarships and grants.

The IRS refused to accept the Form 1098-T as evidence to support the credit on his return.

The IRS took the position that the "amount billed" was irrelevant. The form did not indicate how much the student paid.

We submitted account statements from the school, and the IRS accepted them.

You cannot rely on the data on Form 1098-T to prepare the return.

BMK

[S T]

Example on my prior thread for AOC

Form 1098T Only Box 2 completed and the amount billed was much higher than the amount that I actually calculated paid from the Student's Account Activity and what the parents could substantiate.

As we have all stated these 1098T forms are worthless and creating a lot of work and headaches in preparing the actual Tax Return and calculating Deductions/Credits for Education.

Sandy

[Koss]

Accurate Data

The problem is that most of the time, you cannot rely on anything better. Almost always, the client's records are even worse and if you try to explain what you really need, their entire thinking blows a fuse.

I certainly agree that many clients have some difficulty understanding what information we really need to accurately calculate their qualifying educational expenses. I have worked with uneducated, blue-collar parents who did not go to college, who have actually said things like, "we haven't paid anything to the school yet... she's gotta pay it back after she graduates."

The concept that the tuition has been paid with borrowed funds is alien to them; they may not even understand that the school is not the lender.

But I think we have a duty to educate them, and collect the right information, instead of relying on a worthless information document.

BMK

[S T]

I believe trying to Educate the Parent or Client is harder than reading a form - I receive all types of paperwork, none of what I am looking for to obtain the Education Paid Info to enter on the Tax Return. I have one client on the 3rd Child entering College - so for 4-5 years now I have been requesting the same information and eah year - I receive the same "useless paperwork"

After about 3 tries of incorrect information, I finally just ask them for the College website, User Name and Password to sign in to try to retrieve the information - so that I have some valid amounts to then go back to the client to review with their records.

The client just does not seem to comprehend what we are asking For!

Can't charge enough for these returns - wit the Education Credits.

Sandy

[ruthc]

Yes, educate...

I appreciate everyone's comments. I guess I'm not crazy after all!