Major Changes to the 1098-T Reporting Method – What has Changed and What Do We Do? – McClintock & Associates
The Internal Revenue Service is now enforcing the Form 1098-T reporting changes, first introduced in 2016. The significant change requires educational institutions to report payments received for qualified tuition and related expenses (QTRE), rather than the amounts billed to students.
Prior to this year, educational institutions were able to provide an eligible student with either the amount billed, or the amount paid for tuition and eligible expenses. This led to students claiming a credit on their tax returns for tuition expenses billed, but ultimately never paid. By making this reporting change, the IRS will be able to match up the credits and payments to avoid this loophole.
Who is required to file Form 1098-T?
For purposes of this reporting requirement, an eligible educational institution is a college, university, vocational school or other postsecondary educational institution that is described in Section 481 of the Higher Education Act of 1965 and that is eligible to participate in the Department of Education’s student aid programs. This includes most accredited public, nonprofit and private postsecondary institutions.