Last year the Internal Revenue Service changed the requirements schools, colleges, and universities must follow for reporting billing and payment information on IRS Form 1098T Tuition Statements. Under the old rules schools had an option of using either the Box 1reporting method which reports the aggregate amount of payments received by the institution for qualified tuition and related expenses, or the Box 2 method which reports on the aggregate amount billed. Now, beginning in tax year 2018 which runs from January 1, 2018 – December 31, 2018, only the qualified tuition and related expenses actually paid can be reported on Form 1098-T. Box 2 reporting will not be an option for the 2018 1098T Form.
As we reported earlier, the IRS granted schools some amnesty, allowing them extra time to comply without facing penalties. Thus, schools are still allowed to use the Box 2 reporting method for the 2017 tax year (January 1, 2017 – December 31, 2017), but will need to begin tracking payments received beginning on January 1, 2018 in order to produce the 2018 statements they will be required to issue in early 2019.
The IRS is not planning to grant any further relief from the Box 1 reporting requirement on the Form 1098T. Guidance for implementing these changes for Form 1098T reporting requirements are expected later this year. In the absence of guidance from the IRS, institutions are expected to make a good faith effort to report the required amounts in Box 1 for tax year.