The Taxpayer Relief Act of 1997 (TRA-97) established two education tax credits: American Opportunity Credit for students enrolled in one of the first two years of postsecondary education and are carrying at least a half-time workload while pursuing an undergraduate degree and the Lifetime Learning Credit for students who take 1 or more classes from a college/university to pursue an undergraduate or graduate degree. The IRS requires financial information to be supplied in the boxes of the 1098-T form. Your school can choose to use Box 1 (Payments) or Box 2 (Amount billed) for qualified tuition and related expenses. Financial Aid i.e. grants and scholarships excluding any loans are reported in Box 5. Please note, not ALL boxes need to be populated, in many cases boxes 3, 4, 5, 6 and 7 will be empty and box 5 will ONLY be populated if you received scholarships or grants, this year.
To claim either credit, use IRS Form 8863, Education Credits. The information on the 1098-T form is provided to assist you in preparing IRS Form 8863. Form 8863 attaches to your tax return and is used to determine your eligibility and the amount of education credits you may be entitled to claim on your Federal Individual Income Tax Return. Additional requirements and conditions apply, including income ceilings on eligibility and possible reductions to be the amount of qualified education expenses that can be claimed. If you are claimed as a dependent on another person’s tax return (such as your parent), please give this notice to that person. Please note that taxpayers with Modified Adjusted Gross Income are not eligible to claim either credit and therefore, may disregard this notice.
Neither your school nor its Tax Credit Reporting Service (ECSI) can provide individual income tax advice. After reviewing this information, if you have any 1098-T tax related questions, regarding your tax credit, your eligibility, reporting your tax credit on your tax return, or any other 1098-T specific concerns, please consult your tax professional or the IRS at 1-800-829-1040 or www.irs.gov.
If you have questions regarding the Taxpayer Relief Act of 1997 or your individual 1098-T Form, please access: www.ecsi.net/1098t. The following information is available: on-line access to your 1098-T form and IRS Form 8863, an overview of TRA-97: information describing educational tax credits and other valuable resources.