Education credits due diligence

[RightOn]

A question on Form 8867 about American Opportunity Tax Credit:

Question 11:

"Did the taxpayer provide substantiation such as a Form 1098-T and receipts for the qualified tuition and related expenses for the claimed AOTC?"

I have been thinking if the Form 1098 shows actual payments received by the school in box 1, we do not need to ask for receipts. But the question seems to imply that we still need to ask for both Form 1098-T and receipts even if the school has used box 1 to report the actual payments.

It just seems redundant to still ask for receipts and unnecessary extra works when the school has already certified the amount of qualified payments in box 1 already.

What does everyone else think?

[Jiggers]

A question on Form 8867 about American Opportunity Tax Credit:

Question 11:

"Did the taxpayer provide substantiation such as a Form 1098-T and receipts for the qualified tuition and related expenses for the claimed AOTC?"

I have been thinking if the Form 1098 shows actual payments received by the school in box 1, we do not need to ask for receipts. But the question seems to imply that we still need to ask for both Form 1098-T and receipts even if the school has used box 1 to report the actual payments.

It just seems redundant to still ask for receipts and unnecessary extra works when the school has already certified the amount of qualified payments in box 1 already.

What does everyone else think?

The 1098-T's are probably not correct. You can't rely on the 1098-T.

[Lion]

And, the 1098-T doesn't say WHO paid.

(I still haven't seen a 1098-T that used Box 1.)

[RightOn]

I just find it hard to understand a mistake can be made on the amount of tuition paid. If a school cannot even figure out correctly the exact amount of tuition payments that a student has made, how can they make sure all the students pay their tuition? It is not a number that needs to be figured out by a rocket scientist. I just do not see the room that an error can be made on adding up the payments.

I think most students pays their tuition online these days. So, in case they cannot find the original receipts issued, do you just tell them to go to the school accounting office to ask for a copy of the receipt?

And, the 1098-T doesn't say WHO paid.

(I still haven't seen a 1098-T that used Box 1.)

I have one 1098-T case this year and the amount is reported in box 1. But I do expect most of the 1098-Ts that I see later will still use box 2 until every school is forced by law to use box 1.

[RightOn]

This Form 1098-T reports the tuition payment in box 1.

And then one page 2, the school reports the "Payments Received for Tuition and Related Expenses". They listed out the transaction date, academic term, academic year, financial description and amount of each payments that the student has made during the year. Can this be considered a receipt of the payments?

[DonB]

This Form 1098-T reports the tuition payment in box 1.

And then one page 2, the school reports the "Payments Received for Tuition and Related Expenses". They listed out the transaction date, academic term, academic year, financial description and amount of each payments that the student has made during the year. Can this be considered a receipt of the payments?

I would accept that as a valid receipt.

[ATSMAN]

That must be some 1098-T that breaks out the payments made including dates!

I have to request my clients to provide that information.

[RightOn]

That must be some 1098-T that breaks out the payments made including dates!

I have to request my clients to provide that information.

I have two 1098-T cases so far this year. Both of them have the payments reported in Box 1.

Both Form 1098-T has the section "Payments received for Tuition and Related Expenses" on page 2. One of them has the payments broken down with transaction date, academic term, payment amount, etc, like I have described in a prior post. The other one only lists the total for the whole year. So looks like it just depends on the school to decide how detailed they want to present the information.

I just hope they will make a rule next year that every school is required to provide the payment information in box 1 and then lists out the detailed transaction information of each payment made by the students. It will just make our life much easier.

[Rapid Robert]

I just hope they will make a rule next year that every school is required to provide the payment information in box 1

Too late, IRS has already waived penalties for not filing with Box 1 amounts for 2017 tax year, 1098-T issued in early 2018.

[Burke]

Most of the schools I encounter have on-line accounts under the student's name that can be accessed via a password and user ID. Either the student or the parent (if they have that information) can pull it up and print it out. I often have them do that and provide it to me where the 1098-T does not provide detailed transcripts of payments.

[Burke]

And, the 1098-T doesn't say WHO paid.

(I still haven't seen a 1098-T that used Box 1.)

I don't think it matters who paid. The deduction is attributable the eligible student.

[RightOn]

Most of the schools I encounter have on-line accounts under the student's name that can be accessed via a password and user ID. Either the student or the parent (if they have that information) can pull it up and print it out. I often have them do that and provide it to me where the 1098-T does not provide detailed transcripts of payments.

If the Form 1098-T of the student has provided the detailed breakdowns of the payment information already such as the transaction date, academic term, academic year, financial description and amount of each payments that the student has made during the year, do they still need to go get the transcripts of payments?

[RightOn]

Most of the schools I encounter have on-line accounts under the student's name that they can access via a password and user ID. Either they or the parent (if they have that information) can pull it up and print it out. I often have them do that and provide it to me where the 1098-T does not provide detailed transcripts of payments.

Not that I disagree with you, but I just still do not understand. If the school has the total payments made reported in box 1 already, what purpose would it serve to get the payments transcript from the school?

I am thinking that if the school's accounting system is so messed up that they could have added up the payments made during the year incorrectly and so reported a wrong amount in box 1, why would we think that the information on the school payments transcript must be correct?

[Burke]

If the Form 1098-T of the student has provided the detailed breakdowns of the payment information already such as the transaction date, academic term, academic year, financial description and amount of each payments that the student has made during the year, do they still need to go get the transcripts of payments?

No, IMO. Such detail on the 1098Tshould be sufficient to make a determination of eligibility of the expense. However, note the IRS requirement for this year for the 1098-T and receipts for payments of eligible expenses. Where this specific breakdown is NOT provided on the 1098-T, I would request a transcript. Note sometimes scholarship information is incorrectly included in Box 1, and the 1098-T probably does not include other eligible expenses such as books, etc.

[RightOn]

If needed, I would ask the students to get a record of their student account transactions from the school. Is it the same as the payments transcript that you have been mentioning?