1098-T Box 7

[Corduroy Frog]

Yes, the form we love to hate - the 1098-T.

Box 7 is a check-off box to indicate if the billed amounts include any for the academic period
beginning January-March of the succeeding year.

My question: If the institution is able to indicate an entry in that box, that means they have a
record of a billing in the future time frame of the winter semester/quarter. If they can answer
the question, why can't they provide an amount as well? That would help tremendously and the
institution already has the information.

It is my understanding that if the taxpayer pays the future amount during the tax year, he is
entitled to an education credit (other facts being allowable). And if he doesn't pay the future
amount, he is NOT entitled to the credit.

Please, someone jump on my case if I'm wrong, or headed down the wrong path...

[Lion]

You're right, but would you really trust that info from the school?! Just use the transcript your client provides you or their records of payments made. As you say, as long as they paid during the calendar year, they get to deduct it for the calendar year, as long as it's for the year or the upcoming winter semester, all other qualifications having been met.

[FEDUKE404]

Get the records and sleep better

As we all know, Form 1098-T in general serves no useful purpose (I'm ducking while someone agains finds an error with my verbiage).

At least it does tend to accurately pick/choose the "qualifying" versus "other" expenses that a student incurs.

Box 7 allows some payments, generally those for the spring semester, to show up on the "prior" year Form 1098-T per IRS regs.

But, as Lion stated, just get the payment records from the individual and use those as reliable payment information.

Now, back to our regularly scheduled programs.

FE

[Roland Slugg]

Call me simple but when a client produces a 1098-T, I just use the amount shown in Box 1 or 2 and don't concern myself with the rest. Okay, I look to see if that "half-time student" box is checked, I guess.

[FEDUKE404]

Different years

Call me simple but when a client produces a 1098-T, I just use the amount shown in Box 1 or 2 and don't concern myself with the rest. Okay, I look to see if that "half-time student" box is checked, I guess.

Not to say they are not out there, but I have NEVER seen a Form 1098-T with a number in Box 1....it's always in Box 2.

And if you automatically use what is in Box 2, you most likely will have an erroneous tax return. For the many public colleges in this state, the spring semester numbers for an academic year (which would otherwise appear as "billed") must generally be paid by the end of the prior calendar year. But, if not paid by 12/31/20xx that "billed" number is irrelevant to the current tax return, regardless of what is shown on the Form 1098-T. The problem is further complicated by the fact that a scholarship (Box 5) for the same time period may not be credited until the following calendar year, thus showing up on that year's Form 1098-T. Assume a freshman who has allowable expenses of $5000 each semester and a $1000 scholarship each semester. The tax document will likely show $10k of qualifying expenses, and perhaps $1k (or even zero!) as scholarship depending upon when the funds were credited to the account. But the dollar amount that could be used for college education expenses, based upon the facts and not the piece of paper, would be $8k. Taking it one step further, under the same scenario the senior could easily have (in year of graduation) a Form 1098-T with ZERO qualifying expenses but scholarship income appearing.

You simply gotta track the money....using the Form 1098-T only as a very approximate starting point.

FE