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B U R S A R S E S S I O N

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Form 1098-T Reporting Refresher

Today’s Agenda 2

Introduction

Overview of education tax credits

1098-T reporting requirements

Issues for Bursar Office

What’s changed since last year

The 2012 Form 1098-T 3

Requirements

Education Tax Credit for 2012 4

The Hope Scholarship Credit has been replaced by the American Opportunity Tax Credit

Requirements

Education Tax Credit for 2012 5

The Hope Scholarship Credit has been replaced by the American Opportunity Tax Credit

Requirements

Education Tax Credit for 2012 6

The American Opportunity Tax Credit can be used for all four years of post-secondary education and includes expenses for course-related books, supplies and equipment that are not necessarily paid to the educational institution

The Lifetime Learning Credit – up to $2,000 for qualified education expenses paid for all eligible students. No limit on the number of years this credit can be claimed.

Requirements

Advantage of Tax Credits 7

Tax credits are a direct reduction of taxes owed and are not an itemized deduction

American Opportunity Tax Credit - Up to $2,500 of the cost of tuition, fees and course materials paid during the taxable year. Also, 40% of the credit (up to $1,000) is refundable. This means you can get it even if you owe no tax.

Lifetime Learning Credit – Up to $2,000 of the cost of tuition, fees and related expenses such as student activity fees and expenses for course-related books, supplies and equipment. Requirements

What Is Not a Qualified Education Expense? 8

Sports or hobby-related course fees and any noncredit course fees, unless • It’s part of the student’s degree program • Helps the student acquire or improve job skills (Lifetime Learning only)

Personal Expenses • Room • Board • Medical (including student health fees) • Transportation

Nonacademic fees • Student fees • Athletic fees • Technology fees • Insurance

Requirements

Eligible Educational Institutions 9

Must file for each student enrolled for whom a reportable transaction is made.

Have a choice of reporting payments received or amounts billed for qualified tuition and related expenses.

Requirements

Eligible Educational Institutions 10

Do not have to file a 1098T for: Non-credit courses

Non-resident alien students unless requested by the student

If qualified tuition and related expenses are covered entirely by scholarships or grants

Students for whom you do not maintain a separate financial account and whose qualified tuition and related expenses are covered by a formal billing arrangement.

Requirements

Box 5. Scholarships and Grants 11

Total amount of any scholarships or grants that you ADMINISTERED and PROCESSED during the calendar year for the payment of the student’s cost of attendance.

All 3rd party payments – excludes family members and loan proceeds – but includes private and governmental entities such as DOD, civic and religious organizations and nonprofit entities.

Requirements

Deadlines – check this out 12

File with the IRS Paper copies (if total forms furnished are less than 250) file by

February 28, 2013

Electronic filing (required for 250 or more forms) due April 2, 2013

Furnish to students by January 31, 2013 In the mail by or on January 31

Available electronically – student must opt into electronic to exclude mailing the paper version

Requirements

Issues for the Bursar Office 13

Electronic delivery Educational institutions may give students the option to

consent to receive Form 1098‐T electronically as part of a global “Consent to do Business Electronically,” combining consent for electronic delivery of Form 1098‐T along with other institutional student business functions such as admissions, registration, billings, and direct deposits. The global consent process must meet all the consent, disclosure, format, notice, and access period requirements for electronic furnishing of Forms 1098‐T as required by paragraphs (a)(2) through (6) of Treasury Regulations 1.6050S‐2. For more information about the requirements to furnish a statement to each student, see part M in the 2011 General Instructions for Certain Information Returns.

Issues

Paid or Billed During the Calendar Year

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Big Decision – which box to use?

Box 1 – to report all payments (Payments include scholarships)

Box 2 – to report total tuition charges

Requirements

****More About Payments or Amounts Billed 15

Box 3 – change your method for Box 1-2?

Box 4 – Adjustments - depend on your method For any prior period after 2002

Box 7 – payments or charges for academic periods next calendar year?

Requirements

Scholarships and Grants 16

Box 5 – scholarships or grants administered by your institution during the calendar year

Box 6 – any reduction of scholarship and grants for any prior period after 2002

Requirements

Scholarships and Grants 17

A payment that is excludable from gross income (other than gifts, bequest, and alike) IRC Section 117 (qualified scholarships)

IRC Section 127 (educational assistance programs)

Education assistance under US Code Title 10, chapter 1606 (educational assistance for members of

the selected reserve)

Title 38, chapters 30, 31, 32, 34, 35 (related to veteran’s benefits)

Requirements

Post-9/11 Veterans Educational Assistance Act of 2008

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For financial aid purposes, VA benefits should not be considered as a resource

For 1098-T reporting, VA benefits would be considered a Scholarship or Grant reported in Box 5

Publication 970, Tax Benefits for Education, provides guidance to taxpayers

Requirements

Student Status During the Calendar Year 19

Box 8 – checked if the student was at least half-time during any academic period

Box 9 – checked if student was seeking graduate degree

Box 10 – not applicable

NOTE: you may be asked for 2 1098Ts for a student who graduated in May and entered Grad school in August – can’t do

Requirements

What Bursar Staff May Hear 20

I want two 1098Ts – one for the undergrad when my father paid and one for the grandmother who is paying for the grad tuition. (WHAT?)

Why was prior year grant funds returned listed on this year’s form? (Returned funds SAP, over award)

My tax accountant said that you would give me a form with payments instead of charges. (Read the form instructions)

Issues

What Bursar Staff May Hear 21

I am the parent and I paid the bills so I want the 1098T to be mailed to me.

I paid a lot more than you have on this form.

I haven’t received my tax form.

Why doesn’t the form have my payments?

I graduated in May but didn’t get a 1098T, why?

Issues

Issues for the Bursar Office 22

“Charges” - Bill in December but semester starts in January? Due date January/Due date December

“Payments” – Receive payment in December but don’t bill until January?

Enrollment changes, domicile changes

Issues

Issues for the Bursar Office 23

1098Ts returned by the Post Office

No SS# for students with qualified tuition

Students with international addresses

International students with qualified tuition

Student reports a wrong name or wrong SS#

Issues

Issues for Bursar Offices 24

Five-year masters programs – when do you “check” the grad box?

How do you handle outside scholarships? i.e. civic organizations, high schools, banks, when the check is made payable to the institution and/or the student?

Americorps/ Jobcorps?

Issues

Issues for the Bursar Office 25

How do you post payments from other universities or colleges? At JMU, depends on what the “payer” indicates:

Georgetown – TAP – 3rd party payment

Duke, Johns Hopkins, Yale – Scholarship

Issues

What’s Changed Since Last Year? 26

Review your 2012 1098-T reporting to ensure information is correct Have there been changes in your student system that

need to be updated in your 1098-T reporting?

Electronic filings with the IRS could fail if boxes 8 and 9 has invalid characters

What's Next

Resources 27

http://www.irs.gov/formspubs/index.html Instructions for the form 1098-T

Publication 970

http://www.nacubo.org/documents/EventsandPrograms/1098T_Webcast_FAQ.pdf

What's Next