Tax Benefits for Education
The Internal Revenue Service (IRS) requires colleges and universities to report either payments made by students for qualified expenses ("payment method") or amounts billed to students for qualified expenses ("billing method"). Purdue University has elected to use the billing method to report information on the 1098-T. As a result, KSI reports amounts paid to the students for qualified education expenses (Box 1) and does not report amounts billed by the students (Box 2).
In mid-January, the Administrative Office will generate an IRS Form 1098-T to help students prepare their tax return. The 1098-T reflects the previous calendar year (January through December). Form 1098-T will be emailed and mailed to all students by the first week of February. Students with a delinquent account from the previous academic year are ineligible to receive the 1098-T.
Who gets a 1098-T?
- You will receive a 1098-T only if you had out-of-pocket payments, whether paid by you or with a loan, for “qualified educational expenses.”IRS Publication 970 defines "qualified educational expenses" as tuition, fees, and books.
- You will not receive a 1098-T if you have a delinquent balance. All delinquent balances must be cleared in order to receive a 1098-T tax form.
- You will not receive a 1098-T on the portion of tuition paid with tax-free educational assistance. Per IRS guidelines: If you pay qualified education expenses with certain tax-free funds, you cannot claim a credit for those amounts. You must reduce the qualified education expenses by the amount of any tax-free educational assistance and refund(s) you received. A 1098-T is, therefore, not issued for the portion of tuition paid with tax-free educational assistance including:
- The tax-free part of scholarships and fellowships, Pell grants, Employer-provided educational assistance, Veterans' educational assistance, and/or Any other nontaxable (tax-free) payments (other than gifts or inheritances) received as educational assistance (including CAP and FSEOG grants).