@BelknapPoint and all who have a good knowledge of the tax laws
When our tax preparer prepared our tax return, they agreed that our son’s mandatory book expenses paid to third-party stores were qualified expenses, but they took the position that only a subset of the fees included on the 1098-T box 1 we paid directly to the university were qualified educational expenses. (The sum of the fees listed on the tuition receipt matches exactly the amount on the 1098-T box 1 so we can tell what they are.)
For example, our tax preparer considered that the “Health and Wellness Fee” were not qualified expenses as they could be considered medical expenses even though the university seems to consider they are qualified expenses by including them on the 1098-T box 1.
I was surprised by that approach as I was expecting that the full difference between box 1 (payments) and box 5 (scholarships) on the 1098-T would be claimed (on top of the book expenses).
Do you have a position on the matter? (It’s not big money and we filed anyway but I am curious of what you would have done/think.) Can’t we trust that whatever a university list on the 1098-T box 1 is qualified educational expenses, or do we indeed have to second-guess everything and scrutinize the tuition receipt?
PS: we also paid a few fees that the university did not include on the 1098-T box 1 or on the tuition receipt. We understand that those are definitively not qualified educational expenses.
what?? if they are mandatory fees on the 1098, I’d claim them.
just to say we have done that for 6 years worth for two kids; and will this year as the last for our two college aged kids. and will as long as we qualify for the AOTC for the next two kids. they are mandatory fees charged by the U and in that box. ** that’s OUR perspective – and its not been challenged. . .
But I must admit that things might not be clear-cut and I understand that the tax preparer wants to stay on the safe side.
The IRS websiste says:
“Even if you pay the following expenses to enroll or attend the school, the following are not qualified education expenses:
Room and board
Insurance
Medical expenses (including student health fees)
Transportation
Similar personal, living or family expenses”
No, you can’t trust that what the university has done with the 1098-T is correct, and that includes determining which fees are qualified and which are not. 1098-T forms are notoriously inaccurate.
Like your tax preparer, I would question the inclusion in box 1 by the school a payment for a “Health and Wellness Fee.” The 1098-T is supposed to assist the taxpayer in claiming education tax credits. IRS Pub 970 (“Tax Benefits for Education”) makes very clear in the chapters for both the American Opportunity Credit and the Lifetime Learning Credit that “Medical expenses (including student health fees)” are not a qualified expense.
If you are using non-qualified fees you paid as part of your AOTC calculations, even if those fees are “mandatory,” the reason this practice has not been challanged is because there are so many tax returns and the IRS cannot possibly have strict oversight of everyone of them. Because your returns haven’t been flagged doesn’t mean what you are doing is ok.
@BelknapPoint Thank you for providing your point of view.
An interesting point is that the school seems to officially take the position that the “Health and Wellness Fee” is a qualified education expense by listing it in the included column on a table of fees they include or exclude in the 1098-T on their website.
Anyway, I am going to consider that not claiming it was the right thing to do (although I certainly understand that some people would take a different position - I am pretty sure I would have if I had not used a tax preparer).
The University of Pittsburgh lists “Student Health or Wellness Fees” as non-QTRE payments that are excluded from box 1 on the 1098-T forms that Pitt produces.
My daughter’s school did not itemize fees. There were two charged each semester, one was $125 and one was $250. Every semester, every year she was there. There was a list of what was included, but no amount for those items (like the bus around campus and the health center) so it wasn’t possible to take out $35 for transportation or $55 for the health center. The entire amount was included on the 1098-T and was taken off the bill in one charge/credit.
Other daughter’s school did itemize them and only included the eligible (in their opinion) amounts on the 1098. I think the difference between the billed fees and the 1098 fees was about $200 per year.
Ok - this was making me a bit nervous after reading responses! so I thought about it for a bit; and we are in the clear. One kid has well in excess of $4k to claim for AOTC; the other kid only has a few hundred to claim as because scholarships cover tuition and portion of fees (and I’m including Health center fees in that portion). Both ways we can claim true QEE expenses without including health center fees. BUT - I’ll sure pay attention to this in the future!
