Information about Form 1098-T
Our 1098-T forms will be available to view, print online and mailed by the close of business on Friday, Jan. 30.
Information about the "Form 1098-T"
This year Carroll is reporting numbers on its tax form using registration information, and not cash payments for tax year 2014. The changes were provided by our software vendor and meet the current IRS reporting requirements.
The following questions and answers will guide you through the basics of the 1098-T tax form and offer explanations about the boxes on the form.
- What is a 1098-T form?
- Who is eligible for the tax credit?
- What are the boxes on the form?
- What form or forms do I complete?
- If I do not qualify for the American Opportunity Credit, can I apply for the Lifetime Learning Credit?
- Other recommendations
The 1098-T tax form informs the taxpayer if he/she is eligible for the American Opportunity Credit in tax year 2014. The American Opportunity Credit provides a maximum tax credit of $2,500 for tax year 2014 based on the taxpayers modified adjusted gross income (MAGI). The MAGI limits are $90,000 for single, head of household, widow(er) taxpayers and $180,000 for taxpayers married filing joint.
The student, if not considered a dependent for income tax purposes, is eligible to claim the credit. If the student had tuitions and fees paid by the parents, then the parents can claim the credit providing income for the year is within IRS guidelines. If the student or the parents are married filing separate, then the American Opportunity Credit and the Lifetime Learning Credit cannot be taken. However, the tuition and fee deduction can be used. For a more detailed explanation review other recommendations.
Box “one” is not being used this year for reporting purposes.
- Box "two" represents total amount billed for tuition and qualified fees during calendar year 2014. If the student received a waiver during the year, then the amount of the waiver would reduce the amount in box "two." This amount does not represent cash payments for the year.
- Box "four" nets adjustments to the student's account. If a number is posted to box "four," then this amount should be subtracted from the amount in box "two." Items included in box "four" are the tuition and fee adjustments during the prior year. For example, if the student registered for a class in November 2013 for the spring 2014 semester. The amount would show as an adjustment on the 1098-T because the registration took place in calendar 2014
- Box "five" reflects financial aid and scholarships made to the student during the tax year. If the student's aid exceeds tuition and fees, then the tax credit may not be taken. Review this number to verify that the amount for financial aid and scholarships is not taxable.
- Box "six" shows adjustments for scholarships and/or grants for a term held in the prior tax year.
- Box "seven" will be marked with a "Y" if the student made a registration in tax year 2014 but the class is scheduled for calendar 2015. The registration is reflected in box "two."
- Box "eight" tells the recipient if he/she qualifies for the American Opportunity Credit. The law states that a student must be enrolled at least half time (minimum - six credit hours in one term) in a degree or certificate program. If the student qualifies, then the box will be marked with an "X."
Example: Jane Doe took six credit hours during a year at Carroll. If she took a three credit course in the spring and a three credit course in the fall, she would not qualify because under the law because she would not be considered a half-time student in any one term. If Jane took six credits in the spring term, she would qualify for the Hope Scholarship Credit because under the law she would be considered a half-time student.
To apply for the American Opportunity Credit, one should refer to IRS tax form 8863 and Publication 970 when completing your forms. If you are experiencing difficulty completing the form, you should consult a tax advisor.
If I don't qualify for the American Opportunity Credit, can I apply for the Lifetime Learning Credit?
Yes. The law states a student can claim a credit of twenty percent of total tuition and related fees to a maximum of $2,000 ($10,000 x 20%).
Tuition and fee deduction is another means to get a deduction as an adjustment to income on your 1040 or 1040A form.
The deductible amount may be as much as $4,000 based on income levels. If your modified adjusted income level is less than $90,000 for single and $180,000 for married filing jointly, then you would be eligible to take the deduction. You may not take the deduction if you are married filing separately or if another person can claim you as a dependent on his or her tax return.
Review your personal records for payments made to the college during calendar year 2014. If you have a question regarding what to report, consult with your tax preparer.
Remember, Form 1098-T reports registrations made during calendar year 2014 and does not represent cash payments for the year. Review your financial records and record payments when reporting on IRS Form 8863.
If additional information is needed, contact the college's tax credit line at 410-386-8496. Make sure to leave a message and a phone number so a representative can respond.
Questions relating to your individual tax return cannot be addressed by the college and should be discussed with your tax adviser.
Revised Jan. 27, 2015