The Internal Revenue Service recently announced that colleges and universities will no longer have relief from the Box 1 reporting requirement on Form 1098-T, beginning with tax year 2018 reporting.
Educational institutions are required to file Form 1098-T, Tuition Statement, on an annual basis to report payments of qualified tuition and related expenses. In the past, they’ve had the option to report these payments two different ways:
- Box 1 – Payments received for qualified tuition and related expenses
- Box 2 – Amount of tuition and related expenses billed to a student
This changed with the Protecting Americans from Tax Hikes Act of 2015 (“PATH Act”), enacted in December 2015, which eliminates the ability for educational institutions to report on the amount of payments billed (Box 2) and requires reporting the amount of payments actually received for qualified tuition and related expenses (Box 1).
Under the PATH Act, the change was effective for calendar year 2016 reporting, but the IRS has continued to delay implementation due to pushback from many educational institutions and organizations like the National Association of College and University Business Officers. Several institutions have indicated that additional time is needed in order for their software to be programmed to make these adjustments.
The IRS has indicated in its Notice of Proposed Rulemaking that there will be significant reporting changes to Form 1098-T, but have yet to issue final regulations. Schneider Downs will be following these changes and will post an update once more information is available.