do you get a 1098 t for student loans

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Do you get a 1098-T for student loans?

So, you might be wondering: do I need to file a 1098-T form for my student loan?

The short answer is no. The long answer is yes! It depends on how much money you got from the school and whether or not it was taxable.

If you got an award letter from your school that says you have to pay back the money they gave you, then your student loan money is taxable income. If you were enrolled in a course and received financial aid, then it’s not tax-free money—it’s income as well.

You’ll know if your student loan money is taxable because when you get your award letter, it will say something like: “Your award letter includes awards for…” or “Your award letter shows that [number] dollars has been awarded to cover…” You should be able to find this information on page 1 of your award letter under its heading “TAXABLE.”

do i get a 1098 t form if i get financial aid

Yes and no.  There is no IRS requirement that you must claim an education credit or tuition and fees deduction. Claiming education tax benefits is a voluntary choice for those who qualify. If you don’t want to claim them, you don’t file the form. 

BUT – you must file the form if you would like claim any of the education tax benefits (unless the school is specifically not required to send you 1098-T).

You must also claim the form if your scholarships/grants/tuition free assistance is larger than your education expenses. The excess is your taxable income and must be reported as such with the form 1098-T.

do you get a 1098 t for student loans

It’s that time of year again! If you’re like most borrowers, you’ve received a notice in the mail about your 1098-E form. The 1098-E is the document that shows the interest you paid on your student loans during the tax year.

What do I need to know about my 1098-E?

Your student loan servicer (who you make payments to) will send you a copy of your 1098-E via email or postal mail if the interest you paid in 2020 met or exceeded $600. Even if you didn’t receive a 1098-E from your servicer, you can download your 1098-E from your loan servicer’s website.

If you are unsure who your loan servicer is, log in to StudentAid.gov or call the Federal Student Aid Information Center at 1-800-4-FED-AID (1-800-433-3243; TTY 1-800-730-8913).

Note: If you had multiple loan servicers in 2020, you will receive a separate 1098-E from each servicer.

College students or their parents who paid qualified tuition and college expenses during the tax year will need Form 1098-T from their school if they want to claim certain education credits.

Colleges and universities use the IRS form to report the total dollar amount a student or their parents paid for qualified tuition and expenses during the tax year. Schools are supposed to give a Form 1098-T to students by Jan. 31 of the calendar year following the tax year in which the expenses were paid.

Here’s what to know about this form and what to do with it when you file your federal income tax return.Credit Karma Tax® — Always free 

What should I know about Form 1098-T?

Form 1098-T is an information return. The IRS requires businesses that make “reportable transactions” to file information returns to the IRS and provide a copy to the other party involved in the transaction. For example, people with a mortgage would likely receive a Form 1098 from their lender, reporting how much mortgage interest they paid during a tax year. With a 1098-T, the business — your college — reports how much qualified tuition and expenses you (or your parents) paid it during the tax year.

The IRS uses these forms to match data from information returns to income, deductions and credits reported on individual income tax returns. So if a taxpayer claims an education credit on their federal income tax return and the IRS doesn’t have a 1098-T in its system for them, then the IRS could follow up with that taxpayer to ensure they’re actually eligible for the credit.

Who issues a 1098-T?

Educational institutions that are eligible to participate in the Department of Education’s student aid programs can issue Form 1098-T, including colleges, universities, vocational schools, and other eligible post-secondary education institutions.

Insurers may also file Form 1098-T if they reimbursed or refunded qualified tuition and related expenses.

When is Form 1098-T due?

Colleges, universities and other institutions that issue Form 1098-T are required to provide a copy of the form to the student by Jan. 31 of the year following the tax year in which the expenses were paid. So a 1098-T for tuition paid in 2020 is supposed to be in the student’s hands by Jan. 31, 2021.

The form isn’t due to the IRS until Feb. 28 if filed by mail or March 31 if filed electronically. This way, if a student receives an incorrect 1098-T, they could have time to contact the college or university and request a correction before the school sends the information to the IRS.

Will I get a Form 1098-T?

Some information returns have minimum-filing thresholds. For example, if you pay student loan interest, the lender isn’t required to issue Form 1098-E unless you paid $600 or more in interest during the year.

But Form 1098-T doesn’t have a minimum threshold. Schools are required to issue this form if you paid any qualified education expenses, like tuition, fees or course materials that are required for enrollment – with some exceptions.

FAST FACTS

What education expenses qualify for college tax breaks?

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There are some instances when your college doesn’t need to send a 1098-T, including …

• A course you took didn’t offer an academic credit
• You’re a nonresident alien (although you can request the form)
• Your school waived your tuition and expenses, or they were covered entirely by scholarships
• An employer or a government agency, like the Department of Veterans Affairs or the Department of Defense, covered your tuition and expenses entirely

If you believe you should have received a 1098-T but didn’t, it’s a good idea to reach out to your school and check the mailing address the school has on file.

“From a practical standpoint, the college or university will send the 1098-T to the address on record, which may be the student’s address on campus,” says Steven Rossman, CPA and shareholder at Drucker and Scaccetti, a tax-advising firm with offices in Philadelphia and Scranton, Penn. “The student or the student’s parents may need to log on to the university’s portal or go to the university’s accounting department to get the Form 1098-T.”Credit Karma Tax® — Always free 

What info is on a 1098-T?

Form 1098-T is a relatively short form — it has 10 numbered boxes plus basic identifying information.

Here’s what’s included in each box.

• Filer information: On the left side of the 1098-T, the school issuing the form includes its name, address, telephone number and tax identification number. There’s also a box to include the student’s account number.
• Student information: Also on the left side of the form are boxes for the student’s name, address and tax identification number (like a Social Security number).
• Box 1: This box shows the total amount of all payments the school received from you for qualified tuition and related expenses during the calendar year — minus any refunds or reimbursements.
• Boxes 2 and 3 (no longer used): Until 2017, schools could report expenses in one of two ways: based on how much the student paid during the year or how much the school billed. Starting in 2018, schools use Box 1 to report payments received and Box 2 is no longer used. On the 2020 version of Form 1098-T, Box 2 and Box 3 are no longer used. Both boxes remain on the form as reserved for future use.
• Box 4: The school will complete this box if it needs to report an adjustment made for a prior year (but after 2002), like a refund issued in 2018 for tuition paid in 2017.
• Boxes 5 and 6: Box 5 shows scholarships or grants that the school processed and applied to your tuition during the tax year. Box 6 shows adjustments made to scholarships or grants reported in a prior year (but after 2002).
• Box 7: The school will check this box if some of the tuition you paid in the tax year applied to an academic period that starts in the first quarter of the following year — a payment made in December 2020 for tuition on the semester starting in January 2021, for example.
• Box 8: If you’re enrolled at least half-time during any academic period that began in the calendar year, the school should check this box.
• Box 9: This box indicates whether you were a graduate student.
• Box 10: This box is only used by insurers who issue reimbursements or refunds of qualified tuition and related expenses.

Learn more about taxable income

What should I do with my 1098-T?

When you’re ready to file your federal income tax return, make sure you have your Form 1098-T on hand — if you received one. It can help you calculate two potentially valuable education credits — the American opportunity tax credit and the lifetime learning credit.

“The information reported on Form 1098-T can be used for claiming credits on the student’s or the parents’ tax return,” Rossman says.

So it’s a good idea to look into the requirements to decide who’s eligible to claim the education credits. Just make sure you aren’t double dipping by claiming them on both your parents’ return and yours (if you file a tax return as a dependent). That could trigger a notice from the IRS. Instead, evaluate the best way to apply potential credits before filling out your federal returns.

You can file your federal income tax return using Credit Karma Tax® and claim any education credits you may be eligible for, since the free online tax-preparation and filing service supports forms 1098-T and 1098-E.

What is a 1098-T?

A 1098-T is an information return that the IRS requires colleges and universities to send to students who received any amount of post-secondary education financial aid. This includes grants, scholarships, and student loans. The 1098-T provides information about your student loan interest paid during the tax year. If you received any part of your financial aid in the form of a loan, then you will receive a Form 1098-E.

How do I get my Form 1098-T?

Your school should have sent your Form 1098-T to you by mail in January or February of each year. If it has not arrived by April 1st, contact your school’s financial aid office and ask for a copy. If you still cannot get a copy, contact the IRS at (800) 829-1040.

Bottom line

Higher education isn’t cheap, but certain tax breaks can help defray the costs of getting a college degree. If you receive a Form 1098-T, it’s important to know what to do with it. The information on your 1098-T could help you claim valuable education credits.