The minefields in tuition statements.
By Dennis P. Benvie MS, CPA
Surgent Professional Education
Errors associated with educational credits, specifically for Form 1098-T, can be easily misinterpreted.
Eligible educational institutions often file Form 1098-T to report either the aggregate amount of payments received (Box 1) for qualified tuition and related expenses or the aggregate amount billed (Box 2) for such tuition and expenses. Should you receive this form, here are four common errors to watch for, and how to interpret them.
1) Educational credits are based on the amount of adjusted qualified education expenses paid for the student in 2016 for academic periods beginning in 2016 or beginning in the first 3 months of 2017. An issue occurs when the costs for early 2016 tuition were billed in 2015, and the educational institution utilizes Box 2 of Form 1098-T.Example: In January 2016, Alex pays $6,000 for his final semester of classes. The university Alex attends actually billed the tuition payment in December 2015. In May 2016, Alex pays certain qualifying expenses amounting to $200. Alex receives Form 1098-T for 2016. Box 1 is blank, and box 2 includes $200.