Form 1098-T, Tuition Statement is a form that colleges and universities are required to issue to students who pay qualified tuition and related expenses in the preceding tax year.
Qualified Tuition and Related Expense (QTRE)
Qualified Tuition and Related Expense (QTRE) is tuition and fees required for the enrollment or attendance of a student for courses of instruction at an eligible educational institution. The test for determining whether any fee is a QTRE is whether the fee is required to be paid to the eligible educational institution as a condition of the student's enrollment or attendance at the institution. QTRE’s do not include the costs of room and board, insurance, medical expenses (including student health fees), transportation, and similar personal, living, or family expenses, regardless of whether the fee must be paid to the eligible educational institution for the enrollment or attendance of the student at the institution.
What does the 1098-T report?
Most students will see two boxes populated on their 1098-T, box 1 and box 5. Some students may have box 4 and box 6 populated as well. All transactions on the 1098-T reflect activity that occurred within a calendar year, regardless of the year or term that the transaction affected.
New for Tax Year 2018
Institutions may no longer continue to report amounts billed in Box 2 for tax year 2018 (forms filed in 2019) and beyond. For tax year 2018 (forms filed in 2019), IRS has determined that all institutions must report amounts paid in Box 1. Since Box 2 will no longer be used, it is grayed out on the 2018 form. This will make it difficult to compare your 1098-T with prior years.
Why did I not receive a 1098-T for 2018 when I paid for 2018 charges in 2017?
VERY IMPORTANT: If you registered for Spring 2018 during November or December 2017 and you paid in 2017 (this was noted in Box 7), those charges were reported on your 2017 1098-T. For more information regarding how this should be handled on your tax return, refer to IRS Publication 970, Tax Benefits for Education or contact the IRS Help Line.
Students who graduated in Spring 2018, and were billed for Spring tuition and fees in December 2017, may not receive a 2018 1098-T if they paid in 2017. Those charges were reported on your 2017 1098-T. For regulations regarding reporting these charges, please consult the IRS.
How to Read Your Form 1098-T
Box 1: Payments Received for Qualified Tuition
Box 1 will report payments made toward QTRE in a calendar year. Health services, room and board, insurance, transportation are not considered qualified education expenses by the IRS, so payments made toward these charges will not be reflected on the 1098-T. All other tuition and related expenses paid on the student's account are reported in Box 1.
Box 2 is blank because IRS has determined that institutions may no longer continue to report amounts billed in Box 2 for tax year 2018 (forms filed in 2019) and beyond.
Box 4: Adjustments to Qualified Tuition from a Prior Reporting Period
Any changes to a prior tax year that resulted in a reduction of payments toward previously reported qualified tuition will be reported in Box 4. For example, if the University reports $500 in payments in 2018, but a student retroactively drops a course from 2018 in the 2019 year without fee liability, the dropped value will appear in Box 4.
Note: Since 2018 is the first year of the payment reporting method, Box4 on 2018 1098-T will be empty.
Box 5: Scholarships and Grants Received
Box 5 reports the amount of all scholarships and grants disbursed in a calendar year towards cost of attendance. Scholarships and grants are defined by the IRS, so may include items that you do not recognize as a scholarship or grant-- for example, waivers are not reported in Box 5, however military benefits and payments from third party organizations may be. Amount reported on Box 5 may exceed amount reported on Box 1.
Box 6: Adjustments to Scholarships and Grants Reported in a Prior Year
Similar to Box 4, Box 6 reports adjustments to previously reported scholarships and grants from a prior year. If a scholarship or grant is retroactively revoked, the value of the scholarship or grant will be reported in Box 6.
Items You May Find Useful
UMass is unable to provide tax advice. These Internal Revenue Service (IRS) links offer information regarding education credits: