Effective for 2016 (2016 tax returns filed in 2017)
These changes (see below) disallow a tuition credit or tuition deduction to taxpayers if they have not received a Form 1098-T with all required information.
Under the Trade Preferences Extension Act of 2015 (P.L. 114-27), as described in Sec 804 (Payee Statement Required to Claim Certain Education Tax Benefits), Section 25A(g) of the Internal Revenue Code was amended to add the following new paragraph:
[quote=IRC Sec 25A(g)]
(8) Payee statement requirement.--Except as otherwise
provided by the Secretary, no credit shall be allowed under this
section unless the taxpayer receives a statement furnished under
section 6050S(d) ...
[/quote]
Similarly, P.L. 114-27, Sec 804 also amends Section 222(d) of the Internal Revenue Code regarding the Deduction for Qualified Tuition and Related Expenses to also require that a payee statement be furnished or no deduction shall be allowed.
Note that both provisions treat a Form 1098-T issued to the dependent of the taxpayer as issued to the taxpayer.
Also note that per the Instructions to Form 1098-T, an institution is not required to issue Form 1098-T to students whose qualified tuition and related expenses are entirely waived or paid entirely with scholarships.
Am I correct to assume that if the school bills are due Aug and Dec, the 1098T will list the full year billed expenses and payments made? They will list tuition and fees?
Does this apply to the AOTC? If so, what about folks whose tuition is covered but who have other QEE, such as books, not purchased from the school? Or do books and supplies have to be purchased from the school to qualify?
Yes, IRC Section 25A(g) is for AOTC. The cost of books would not be on the 1098-T, but to claim the credit, a 1098-T would need to be issued (which would show tuition, and scholarships if applicable).
Note - the federal AO Tax Credit can only be used for tuition, mandatory fees, books and required supplies, but not room and board or travel. I mention that because a person above asked about what happens when they don’t pay any tuition out of pocket. Money that is paid towards tuition using loans can be used for the tax credit.
(The 1098s are confusing for some people because they do not include all legitimate higher education expenses that can be used for 529 accounts. For instance, money paid to a college for room and board is not typically listed, which are legitimate 529 account expenses.)
We did not receive the form last year as the total scholarships plus grant is higher than tuition and fees. Nevertheless, there are allowed expenses that I could move around for tax credit beyond tuition and fees. Now with this new policy, I may not be able to do that unless the school would release the 1098-T. I have asked my D’s school last year and they insist not to release one as long as the scholarships and grant are more than tuition and fees.
At least in the past, the tax programs asked if there were scholaships not included, and you just listed the. The tax programs like TurboTax and taxact also asked if the 1098 was correct and you said yes or no and then made corrections. The form for last year for both kids had the scholarships for spring but you can exclude them from the tax year if you are going to pay the tuition for spring after Jan 1.
So I entered the figures off the 1098, said they were wrong, and just used my own numbers. I assume it will be the same going forward.