Adding to amount shown in in Box 1 of 1098-T - OK, or not?

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Dyons
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Adding to amount shown in in Box 1 of 1098-T - OK, or not?

Post by Dyons » Wed Feb 06, 2019 9:04 pm

I paid for my son's Spring 2018 tuition in December 2017. This was correctly recorded in the 2017 1098-T he received. However, owing to income limitations, I was not eligible to take any education tax credits in 2017.

The 2018 1098-T he received this year shows, in Box 5, the scholarship received for the Spring 2018 semester, but does not include, in Box 1, the tuition paid in December 2017 towards it. (Box 1 includes some other amounts paid in 2018.) This is as it should be and I don't question this.

In 2017, as I said, my income was too high to qualify for any education credits. However, circumstances have changed and I (in tax year 2018) am now eligible for all the education credits, including AOTC. As I did NOT take any education credits in 2017, can I now include the 2018 Spring tuition paid in 2017 (and included in the 2017 1098-T) as a part of the 2018 tuition costs (even though not included in the 2018 1098-T?

Is this allowed? Will any discrepancy between the reported 1098-T and my addition cause a query from the IRS?

Thanks in advance for any guidance.

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desertbandit442
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Re: Adding to amount shown in in Box 1 of 1098-T - OK, or not?

Post by desertbandit442 » Thu Feb 07, 2019 9:33 am

Only allowed to take the credit for the year it was actually paid to the institution. Doesn’t matter what semester it was for. Just for info—I prepare taxes. No, you can’t add to the amount in Box 1, you have to use what is actually shown as paid to the institution for qualified education expenses in Box 1.

The only area to further increase paid for qualified education expenses is that for books, equipment for class. That is the only thing above and beyond what is shown on Box 1 of the 1098-T, but you claim that part elsewhere on the Form 8863.

OnTrack2020
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Re: Adding to amount shown in in Box 1 of 1098-T - OK, or not?

Post by OnTrack2020 » Thu Feb 07, 2019 9:51 am

Your tuition costs paid in 2017 (for 2018 tuition) belong on 2017 taxes.

I have another question about the 1098-T and hope dessertbandit returns.

We received our 1098-T, with an overage according to what we paid. We paid x dollars for 2018 tuition. The college my son attends also added into Box 1 his future charges (tuition and fees) for the Spring semester 2019. We paid the Spring semester 2019 in early January 2019. We received a letter from the college stating that reporting requirements under Federal law changed beginning with tax year 2018, and now reported in Box 1 is the amount of QTRE you paid. ????

We didn't pay these future year tuition and fees until early January, so Box 1 is overstated. We have an appointment with our CPA in a few weeks and can ask him then, but do have any idea how to handle this?

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desertbandit442
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Re: Adding to amount shown in in Box 1 of 1098-T - OK, or not?

Post by desertbandit442 » Fri Feb 08, 2019 8:21 am

To answer post directly above this.

Have to report what is in Box 1 of 1098-T as qualified education expenses. For example what is in Box 1 of the 2018 1098-T has to be on 2018 tax return. There are two ways to handle what you are asking: First get the university to issue a corrected 1098-T or when you go to file next year you can use the following on your 2019 tax return (from IRS Form 8863 Instructions):

“The amount of qualified tuition and related expenses reported on Form 1098-T may not reflect the total amount of the qualified tuition and related expenses paid during the year for which you may claim an education tax credit. You may include qualified tuition and related expenses that are not reported on Form 1098-T when claiming one of these education benefits if you can substantiate payment of these expenses.You may not include expenses paid on the 1098-T that have been paid by qualified scholarships, including those that were not processed by the universities.”

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Kenkat
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Re: Adding to amount shown in in Box 1 of 1098-T - OK, or not?

Post by Kenkat » Fri Feb 08, 2019 8:39 am

No, the tax credit is based on the year in which the tuition was paid, not which semester year it applied to. If you did not qualify for the AOTC in 2017, in retrospect, it probably would have been better to pay the Spring 2018 in 2018, not 2017. Too late to do anything about that now. Did he have tuition in Fall 2018? These payments could have been applied as well. You only need to have paid $4000 out of pocket in 2018 to claim the full credit.

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Kenkat
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Re: Adding to amount shown in in Box 1 of 1098-T - OK, or not?

Post by Kenkat » Fri Feb 08, 2019 8:48 am

The amount in Box 1 will typically not match what is actually claimed. Some institutions report based on amount billed, which as discussed, has no direct bearing on what was actually paid and is eligible to claim. Even for institutions that report based on amount paid, there are often other items such as books, etc. that can be claimed that are not necessarily reflected on the 1098-T.

animule
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Re: Adding to amount shown in in Box 1 of 1098-T - OK, or not?

Post by animule » Fri Feb 08, 2019 8:51 am

How about a 1098-T with Box 1 blank, and Box 2 filled in with the amount that should be in Box 1?

How does one handle this?

I have received 1098-T statements before, but they always had an amount in box 1. This one does not. Amount billed is in box 2.

Any thoughts on how to handle this?

sco
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Re: Adding to amount shown in in Box 1 of 1098-T - OK, or not?

Post by sco » Fri Feb 08, 2019 9:29 am

Or when they never do send a 1098-t? We are dealing with this now.

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Kenkat
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Re: Adding to amount shown in in Box 1 of 1098-T - OK, or not?

Post by Kenkat » Fri Feb 08, 2019 9:35 am

If the institution reports amount billed, you have to record your actual expenses paid in that tax year based on your own records. The amount billed is not really relevant and I don’t really know why the IRS allows that option. The college my two sons attend used to report amount billed but switched to amount paid for 2018. The amount I am claiming is much closer to the 1098-T but still does not match exactly due to books, etc.

DIFAR31
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Re: Adding to amount shown in in Box 1 of 1098-T - OK, or not?

Post by DIFAR31 » Fri Feb 08, 2019 1:01 pm

Kenkat wrote:
Fri Feb 08, 2019 9:35 am
If the institution reports amount billed, you have to record your actual expenses paid in that tax year based on your own records. The amount billed is not really relevant and I don’t really know why the IRS allows that option. The college my two sons attend used to report amount billed but switched to amount paid for 2018. The amount I am claiming is much closer to the 1098-T but still does not match exactly due to books, etc.
As noted upthread, the IRS no longer allows reporting amount billed on the 1098-T, starting with tax year 2018. On all 2018 1098-T forms box 2, which was formerly available for reporting amount billed, should be grayed out and/or blank. Schools can now only report amount actually paid for the tax year.

DIFAR31
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Re: Adding to amount shown in in Box 1 of 1098-T - OK, or not?

Post by DIFAR31 » Fri Feb 08, 2019 1:15 pm

OnTrack2020 wrote:
Thu Feb 07, 2019 9:51 am
We received our 1098-T, with an overage according to what we paid. We paid x dollars for 2018 tuition. The college my son attends also added into Box 1 his future charges (tuition and fees) for the Spring semester 2019. We paid the Spring semester 2019 in early January 2019. We received a letter from the college stating that reporting requirements under Federal law changed beginning with tax year 2018, and now reported in Box 1 is the amount of QTRE you paid. ????
Correct, but the box 1 amount should be the ACTUAL AMOUNT that was paid directly to the school for QTRE during the tax year; it should not include any projected payments that were not received by the school during the tax year. Contact the school and request a corrected 2018 1098-T.

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desertbandit442
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Re: Adding to amount shown in in Box 1 of 1098-T - OK, or not?

Post by desertbandit442 » Fri Feb 08, 2019 10:17 pm

Kenkat wrote:
Fri Feb 08, 2019 9:35 am
If the institution reports amount billed, you have to record your actual expenses paid in that tax year based on your own records. The amount billed is not really relevant and I don’t really know why the IRS allows that option. The college my two sons attend used to report amount billed but switched to amount paid for 2018. The amount I am claiming is much closer to the 1098-T but still does not match exactly due to books, etc.
Institution cannot report amount billed anymore on 1098-T. Only Box 1 amount of qualified education expenses actually paid to college as of 2018, then the other Boxes like 5 for scholarships/grants. Box 2 will not be used and always blank as of 2018 reporting requirements.

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Kenkat
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Re: Adding to amount shown in in Box 1 of 1098-T - OK, or not?

Post by Kenkat » Sat Feb 09, 2019 9:28 am

desertbandit442 wrote:
Fri Feb 08, 2019 10:17 pm
Kenkat wrote:
Fri Feb 08, 2019 9:35 am
If the institution reports amount billed, you have to record your actual expenses paid in that tax year based on your own records. The amount billed is not really relevant and I don’t really know why the IRS allows that option. The college my two sons attend used to report amount billed but switched to amount paid for 2018. The amount I am claiming is much closer to the 1098-T but still does not match exactly due to books, etc.
Institution cannot report amount billed anymore on 1098-T. Only Box 1 amount of qualified education expenses actually paid to college as of 2018, then the other Boxes like 5 for scholarships/grants. Box 2 will not be used and always blank as of 2018 reporting requirements.
Thanks, good to know. I never really understood the point of “amount billed”. I thought the institution was being pro-active in switching reporting methods but I see now that they had to.

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desertbandit442
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Re: Adding to amount shown in in Box 1 of 1098-T - OK, or not?

Post by desertbandit442 » Sat Feb 09, 2019 4:48 pm

Kenkat wrote:
Fri Feb 08, 2019 9:35 am

Thanks, good to know. I never really understood the point of “amount billed”. I thought the institution was being pro-active in switching reporting methods but I see now that they had to.
There was a lot of fraud going on with the Education Credits. It was easier for colleges just to show amount billed in Box 2 of the 1098-T and there was not a requirement to report the amount paid in Box 1. As you could imagine taxpayers were claiming they paid the amount billed, minus scholarship/grants reported in Box 5, with their funds/student loans to maximize the education credit. Several years ago the IRS came out with the requirement that the colleges had to show the amount paid during that tax year in Box1. That requirement kept getting pushed back until 2018, where now they have to show the actual amount paid for QUALIFIED EDUCATION EXPENSES, “qualified” meaning payments received during year that qualify for an education credit like American Opportunity Credit or Lifetime Learning Credit.

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