<p>D's college is on a quarter system, and her financial aid package was expressed in quarterly fashion. For fall of 2010 of her freshman year, however, the college tax form sent to us shows 1 quarter's worth of scholarship disbursement, but two quarter's worth of bills charged. Thus, it appears that we have paid more fees to the university for the first quarter than we actually did/will end up paying.</p>
<p>Based on that difference, we'd receive a tax refund for qualified expenses. For the next few cycles the bills and scholarship disbursements will line up in one-to-one correspondance. However, for the final tax period, there will be one more quarter's scholarship disbursement than the number of quarterly bills. Therefore, the money received in scholarship will appear to exceed what was billed and would look like income. </p>
<p>Why does the college do this? What should we do to avoid an audit, getting a refund we shouldn't or paying taxes we shouldn't? Do we ignore the college statement and report based on our numbers? </p>
<p>I hope I've expressed this clearly. We usually have very simple financial dealings and aren't very experienced in tax accounting. Our older child's college's accounting matched up evenly so this wasn't an issue.</p>
<p>Its ok- this isn’t unusual.
Report what numbers are accurate according to your records, even if they do not match up to what the school sent.
In my experience the school records are inaccurate more often than not.</p>
<p>It is pretty irritating. It shows for us that we spent over $40K on tuition for 2010 but it indicates that “qualified tuition expenses are only under $30K,” which makes no sense. Don’t understand their accounting method at all or all the numbers they used to come up with the number they put into box to of the 1098T. For us this year, it doesn’t matter, but it will matter next year when we use D’s Coverdell account. Still, the amount they list in box 2 is still way over the amount in the account, so it should be moot anyway.</p>
<p>This is not unusual. When I first started trying to figure out education related tax stuff I came across this CPA article where they discuss 1098Ts and all the related problems, including the inconsistent way schools report stuff. I bookmarked it as I find it reassuring that CPAs also have difficulty with all this. it has some useful information.
[Navigating</a> the Form 1098-T Tuition Statement: Inconsistencies in Reporting](<a href=“Find Your Page | The New York State Society of CPAs”>Find Your Page | The New York State Society of CPAs)</p>
<p>As EK said, follow your own records and keep good records to support any decisions you do make in the event you are ever asked.</p>
<p>At least for D1s school, it’s because spring tuition is billed in Nov, but FA grants are not applied to this bill until Feb. So, for fr year, the 1098T reports both semesters of tuition but only fall FA grants. The next two years are more balanced, but are still inconsistent since tuition and FA grants are reported for the school vs. calendar year, respectfully. And as you said, that last year leaves you with grants reported but no tuition charged. Here’s how I dealt with it:</p>
<p>S still has not gotten his 1098T form, even tho he was a full-time student through May 2010. His sister (same U) DID get her form, but it had many errors. He also did not get any form showing his earnings or scholarships for 2010. His paperwork always seems to be late–perhaps it did not get to us because of a wrong address? I need to check with him on this. :(</p>
<p>I always wondered about this too … why was it that the amounts on college bills bore no relation to the amounts listed on the 1098? Like many prior posters, I look at the 1098, check it against the bills I paid during the year, then throw the 1098 in a drawer … because it’s almost always way low. (This year the 1098 said $872 … for an OOS public. I wish!)</p>
<p>So far, I have never received a correct 1098T, only ones that greatly understate what we’ve paid, but 1/4 or often MUCH more! You wonder why and how these firms get paid to send out such incorrect info.</p>
He also did not get any form showing his earnings or scholarships for 2010. His paperwork always seems to be late–perhaps it did not get to us because of a wrong address? I need to check with him on this. :(</p>