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We know the 1098-T can be confusing, but we hope the following description of our process will help.
The most confusing part of understanding the 1098-T is reconciling the calendar year with the academic year, and when financial aid is applied.
The IRS allows us to report either payments received (box 1), or amounts billed (box 2), for qualified education expenses. Capital University reports amounts billed (box 2).
We send monthly invoices to our students. Summer semester charges are included in the May invoice, Fall semester charges are included in the July invoice, and Spring semester charges are included in the November/December invoice, depending on your program.*
This means that you are billed for Spring of next year during the current year, so charges for next Spring will appear on this year’s form.
However, based on Federal regulations, Financial Aid (grants, scholarships, loans) cannot be disbursed more than 10 days prior to the start of the semester. So while your charges for Spring count during the prior year, your financial aid for Spring doesn’t count until the current year.
For the next calendar year (2013), the student will get a 1098-T that reflects Scholarships or Grants (box 5) for the Spring 2013 semester and Fall semester 2013.
The 1098-T will also reflect charges (box 2) for the Fall 2013 and Spring 2014 semesters. Note that if the student also attends during Summer 2013, the 1098-T would include those charges and any scholarships/grants for that Summer.
This continues until the student graduates.
In this example, the student graduates in May of 2016. They will receive a 1098-T at the beginning of 2017 for the 2016 calendar year (the calendar year in which they were a senior during the Spring semester). It will reflect Scholarships or Grants (box5) only, due to the fact that the Spring charges were billed in December 2015 and the financial aid was disbursed in January 2016 at the start of their final semester.
» View an annotated sample 1098T form (PDF)
Capital University cannot offer tax advice. For further assistance, please contact your tax professional or the IRS at 1-800-829-1040. You can also visit the IRS website and refer to IRS Publication 970 and Instructions for Forms 1098-E and 1098-T.
American Opportunity Credit (for 2009 and 2010 ONLY) is the new name of the Act taking the place of the Hope Credit. See a more detailed explanation of Credits and Deductions.
* If Box 7 is checked on the 1098-T form, this notation indicates that the Spring tuition charges and eligible fees that were billed in November or December, will be included in Box 2 even though the semester may not begin until January through March of the following calendar year
Capital University is a private four-year undergraduate institution and graduate school located in the Columbus, Ohio, neighborhood of Bexley. Copyright © 2014 Capital University