Income Tax Reporting (1098-T)
The University of Sioux Falls is an eligible educational institution as described in section 481 of the Higher Education Act of 1965 as in effect on August 5, 1997, and is eligible to participate in the Department of Education's student aid programs. As such, the Internal Revenue Service requires USF to file a Form 1098-T for each student enrolled and for whom a reportable transaction is made.
Based upon a selection made with the IRS, the University of Sioux Falls reports amounts billed, rather than payments received, for qualified tuition and related expenses. Qualified tuition and related expenses are tuition and fees billed to a student to enroll or attend an eligible educational institution.
The 1098-T reports information on the filer (USF) and the student, with corresponding federal identification numbers, and contains 10 numbered boxes of information needed to complete personal income tax returns. The boxes that will apply to most USF students are as follows:
Box 2: Amounts Billed for Qualified Tuition and Related Expenses
Box 5: Scholarships or Grants
Box 8: Check if at Least Half-Time Student
Box 9: Check if is Graduate Student
Box 2, Amounts Billed for Qualified Tuition and Related Expenses, includes amounts billed during the calendar year for qualified tuition and related expenses. Qualified tuition and related expenses include:
· Tuition charges
· Student Fee charges
· CLEP charges
· On-line Course Fee charges
· Course surcharges (rare)
Qualified tuition and related expenses do not include:
· Personal payments and loans
· Room charges
· Meal charges
· Student Health Insurance charges
· Amounts paid for books
· Transcript Fees
Box 5, Scholarships or Grants, includes the total amount of any scholarships or grants that USF administered and processed during the calendar year for the payment of a student's cost of attendance.
In general, scholarships and grants received to assist an individual with payment of educational expenses are not considered taxable income. Tax-free educational assistance reduces the cash payment of the student for qualified tuition and related expenses.
Subtracting Box 5 (tax-free educational assistance) from Box 2 (qualified tuition and related expenses) will normally result in the cash payment made by the student for qualified tuition and related expenses. Loan proceeds used to pay educational expenses are considered paid on the date the funds are applied to a student's account, and are treated as cash payments made by the student for income tax purposes.