Greetings to all tax filers in the USA! As the tax season approaches, it's time to prepare to file your income tax returns. One of the essential forms that you might need to file is Form 1098-T. This document reports the tuition and related expenses paid or received by eligible educational institutions and students.
Form 1098-T is essential for both educational institutions and students. Educational institutions use this template to report the amount of qualified tuition and related expenses students pay during the calendar year. On the other hand, students use this form to claim educational tax credits on their income tax returns. The eligible expenses include tuition, fees, books, and other required course materials. However, expenses such as room and board, transportation, and insurance premiums aren't eligible.
There are certain restrictions for using Form 1098-T: Tuition Statement. Only eligible educational institutions can issue this document. They must do so if they have enrolled students who paid for qualified tuition and related expenses during the calendar year. Institutions are not required to issue the form if scholarships or grants entirely pay for the student's tuition and related expenses. Additionally, institutions aren't required to issue the document if the student's tuition and related expenses were waived or refunded.
The due date for filing the 1098-T sample to the IRS in 2023 is March 31. Institutions are required to file the copy electronically using the IRS's FIRE system. Failure to file the form on time or accurately can result in penalties. The penalty for failing to file or filing an incorrect template can range from $50 to $550 per sample, depending on how long after the due date the copy is filed.
Institutions can also be penalized for failing to provide a correct recipient copy of Form 1098-T. The penalty for this can range from $50 to $270 per form, depending on how long after the deadline the copy is provided. Therefore, educational institutions must file the completed example accurately and on time to avoid penalties.
There are no significant changes in the template for Form 1098-T for the 2022-2023 tax year compared to the previous years. However, there are a few changes to the instructions for the sample. The IRS has clarified the reporting requirements for scholarships and grants, including how to report scholarships and grants that exceed the student's qualified education expenses. Additionally, the IRS has updated the instructions on reporting adjustments to the prior year's qualified education expenses and scholarships or grants.
