According to an email from D’s college -
Ugh. This is the last year of this, thank goodness. Will sort it out this winter…
(Might belong in Parent Forum rather than FA forum, wasn’t thinking but this is about a tax credit @MaineLonghorn ? )
Thank goodness. That should cut down on the “prove you paid the billed tuition” letters from the IRS.
The change is relevant to the AOTC and the tuition deduction, and marginally relevant to 529 plan distributions. If you don’t have any of those, you can ignore the form entirely.
I agree. For schools that previously reported expenses billed as opposed to expenses paid, this new requirement will provide a better picture on the 1098-T as to what actually happened and when, which is important for properly substantiating education tax credits.
This is the last year of AOTC for D.
I think this is going to mess us up. We always claimed fees for both semesters because we paid them in the same year (Aug and Dec).
Normally I could just make sure to pay the billed fees in December so they show up as “paid” on the 2018 1098T.
But because D has “anticipated aid” of grant and subsidized loan listed in her student account, the balance is $0 and I cannot make a payment.
I assume that since the loan and grant will post to the account in early January, they will show up on next year’s 1098T.
If the loan is used for payment, it is as if you paid cash for that amount
If you do this for all four academic years, you can end up shortchanging yourself (or your child) of an extra year of education tax credits. If you instead make the payments for the four academic years over the five tax/calendar years that normally the academic years fall in, it’s possible to take full advantage of the maximum four American Opportunity Credits, plus a year of the Lifetime Learning Credit.
@twoinanddone yes, that’s true, but the loan will post in January, so it would be considered paid in 2019, right?
In the past the bills were paid in August and December of the same year. My D has a tuition scholarship so we only claim qualified fees and any book expenses for AOTC.
The 1098T would show billed amounts for tuition and fees for both semesters.
Last year the 1098T showed billed amounts for tuition and fees for both semesters but scholarship and loan didn’t post to the account until January for the spring semester (spring semester started a few days later).
@BelknapPoint we are taking the AOTC for four years. We could claim the fees and books for both semesters in the last three years because we paid them in the same year. This year we might only be able to claim one semester for AOTC.
But if that happens, we can possibly claim the lifetime learning credit for 2019 and 2020. She will have two more years of school after her bachelor’s degree.
what’s the lifetime learning credit?
The income limits are lower for the LLC.
In all the 1098-Ts that I received, not a single one was correct for how I did the taxes. Because the spring scholarships and grants never posted until Jan (or even Feb), I always kept the amounts billed and paid for the spring in the spring tax year. The 1098-T usually had the spring tuition as billed in the prior tax year. I filed in the amounts from the 1098-T on the tax software questionnaire and then checked the box ‘this is not correct’ (or whatever it says) and filled it in with my own numbers. Never had a problem.
I think under the new system the numbers would be closer to what I reported every year since I never paid spring tuition in December. I won’t ever know because my last one graduates next week and I won’t have any more payments in 2019.