![]() Unfortunately, many tax prep software programs only ask you to enter amounts from your 1098-T, not all qualified higher education expenses, and will calculate taxes and penalties when you enter 529 withdrawals in excess of the 1098-T amount entered, and tell you you're not eligible for the AOTC due to 529 withdrawals in excess of qualified expenses. (Your 1098-T will have Box 7 checked if it includes amounts invoiced in December for the following calendar year's academic term.) For example, if you paid tuition for winter quarter of 2022 in December, 2021, you can only claim that payment for your 2021 AOTC. ![]() Either way, the AOTC only allows expenses paid during the calendar year to be used for that calendar year's credit. In addition, your 1098-T might show amounts paid during the calendar year or amounts billed. These need to be added to the family's qualified expenses, and receipts should be kept in the event of an audit. The AOTC includes books and supplies, regardless of where they are purchased, among qualified expenses. Both education tax credits and 529 withdrawals have additional qualified expenses that need to be added to amounts on the 1098-T for tax filing purposes. One important point about form 1098-T: it only shows tuition net of scholarships. It serves two primary purposes:ĭocumenting eligibility to claim the American Opportunity Tax Credit or Lifetime Learning Creditĭocumenting that the student was enrolled in a college and that 529 withdrawals up to net cost of attendance are therefore qualifiedįorm 1098-T isn't filed with your taxes instead, you use the information to file and then keep it for your records. Form 1098-T is a tuition statement that students receive from their college.
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