Form 1098-T, Tuition Statement, reports payments received by eligible educational institutions for qualified tuition and related expenses. The calculation involves determining the total qualified tuition and related expenses paid during the tax year, reducing this amount by any refunds or reimbursements, and reporting this net figure in Box 1. Institutions may alternatively report amounts billed instead of amounts paid, which affects the reported figure. This approach offers an alternative method to calculating reportable qualified expenses.
Accurate calculation and reporting on this form are important for students and parents seeking education tax credits, like the American Opportunity Tax Credit or the Lifetime Learning Credit. These credits reduce the tax liability for those incurring educational expenses. Institutions are required to file these forms with the IRS and provide copies to students by January 31st, enabling individuals to accurately claim potential tax benefits. The information serves as a critical component of an individual’s tax return, supporting deductions or credits related to educational investments.
