<p>Our daughter is a freshman in college, so this is the first year we are dealing with college tuition deductions and were planning on using one of the deductions depending on which we qualify for. Anyway, my tax advisor just called me and said that box 1 of the 1098-T from the university shows $0 paid, but has the $20000 billed for the fall semester in the other box. We told him that we paid some money out of pocket, and a student loan was taken out for the balance. He said that if he proceeds with a number different than $0 (which is what the university put in box 1), then it could trigger an audit by the IRS. </p>
<p>No one would answer the phone at the university (of course), but they replied in an email and said "We do not show the payments we show the charges and the scholarships, the payments can be seen on self service". (Whatever that means)</p>
<p>Has anyone been in this situation, what is the proper course of action?</p>
<p>I feel your pain! A few weeks ago I started a thread on this very topic, but it isn’t coming up for me now when I search for it. If I find the link, I’ll post it.</p>
<p>The IRS, the college FA office, and all CC posters advised us to submit the real numbers that represent the amount you actually paid the school. Apparently, it is common knowledge that these forms are inaccurate. (How dumb is that? Like a W-2, shouldn’t it officially substantiate your records?) Anyway, in our case the problem was that the college form showed us as having been billed for 2 quarters of tuition but only having been given financial aid for 1 quarter. For some reason related to the school’s accounting system, the second grant disbursement will show up on next year’s form instead. In reality we were given the same aid for the second quarter as for the first, so the form made it look as though we paid more tuition this year than what we actually did. We didn’t want to get a tax refund for 2010 based on an inaccurate report, and nor do we want to pay taxes on that financial aid in 4 years when the shifted grant disbursement will then appear to exceed the cost of the tuition and fees we paid for her final winter and spring quarters.</p>
<p>We also were concerned that a discrepancy would trigger an audit, but we’re still using our actual payments for tax purposes, not the college’s numbers.</p>
<p>Thanks. Just spoke with another person who is in the same situation and he said that he is using actual costs and not that reported on the form.</p>
<p>I hope that the IRS develops new rules for colleges on how this information is reported. While the OP and others who have read this thread now know what to do, how many others end up just following the 1098T without understanding this. </p>
<p>I would complete the form using actual dollar amounts, then keep a copy of the receipts, billing information, etc with the tax form in case the IRS requeste additional information. It is just like with small business expenses. You don’t need to send the IRS information up front, but you need to have the documentation to back it up if they ask.</p>
<p>From my original googling on this matter, many parents are at first perplexed by the numbers. I had one child have the whole bill on the first 1098T and another had the full year, but half scholarship. I called the IRS and they said although that form is submitted to them, it isn’t like a W2 and they realize every school has their own way of filing it. You have to put what is accurate.
I asked why they even had to submit it, and they said, if there was a question, they would ask for more clarification, but it’s usually in the ballpark. Hmmm</p>
<p>When I first navigated this process I came across this CPA journal article that talks about how inconsistent 1098Ts are and how complex the tax process can be. My recommendation is to file according to your actual numbers and keep good records.</p>
<p>It might not be a bad idea to look for another CPA. You have several years of 1098-T ahead of you, but time is too short to have to deal with a tax advisor who visibly knows nothing about college funding, as this is an incredibly basic and common issue.</p>
<p>Translation? “There are no colleges that calculate the correct value, but the error that colleges calculate is a small amount in all cases.” Oh my … if the error is consistent and small, wouldn’t it be easier to simply provide the correct value???</p>
<p>Colleges are not necessarily making “mistakes” as much as using different methods. Schools can select between the cash or the billed methods, and decide to report or not report certain expenses.</p>
<p>My D attends a college that doesn’t report expenses for Summer Sessions or study abroad. In our case, the difference between the 1098-T and amounts actually paid was an order of magnitude. (But to be fair, it was only ONE order of magnitude. One is a small number, right?)</p>