1098T FAQ -- Calendar Year 2008

Q1.      What is Form 1098T?   It is an informational statement that we are required to provide to certain students (and the IRS) to report the amount of qualified expenses billed, all scholarships and grants received (for both qualified and non-qualified expenses), and whether the student was enrolled at least-half time.

Q2.      What is a qualified/non-qualified expense?  Qualified expenses are those eligible for a tax credit or deduction, while non-qualified expenses are not eligible for a credit or deduction.  C of O’s Cost of Education (tuition), part-time class charges, and certain class-related fees are qualified expenses, but room and board and the incidental fee are non-qualified expenses (BUT SEE Q6 BELOW).  Qualified expenses billed to C of O students in 2008 are reported in Box 2.

Q3.      Who should receive a 1098T?  Colleges are not required to provide a 1098T to students whose qualified tuition is waived or paid entirely with scholarships or grants.  Because the College provides 100% of the Cost of Education for full-time students through a combination of the work program, federal, state, and institutional funds, most C of O students will not receive a 1098T.  Students who paid for work hours, part-time class charges, or required class fees should receive a 1098T.

Q4.      Since I received Form 1098T, will I qualify for a tax credit?  Not necessarily.  The IRS has established two education tax credits; The Hope Credit and the Lifetime Learning Credit (both use IRS Form 8863).  Under IRS guidelines, students or parents may claim an education tax credit based only on qualified expenses actually paid by the student or parent during the year.  (BUT SEE Q6 BELOW)  (NOTE:  amounts paid by students are not reported on the 1098T.)

Q5.      Does the amount in Box 2 of my 1098T equal the qualified expenses I can claim as a tax credit?  No.  The College is required to report the total qualified expenses billed (Box 2) and all scholarship/grant amounts (Box 5), but you must review your payment records to determine if you paid for any qualified expenses.  Examples of payments for qualified expenses include cash payments for work hours, part-time class charges, and required class fees.  Students can obtain payment history in “My Account Balances” in Campusweb.

Q6.      Can I claim a tax credit or a deduction for the amount I paid for room and board?  Usually no; room and board charges are defined as non-qualified expenses.  Payments for non-qualified expenses are usually not eligible for a tax credit or a tax deduction.   HOWEVER, the IRS has announced special tax rules for 2008 for Midwestern Disaster Areas, and Taney County is included.  Therefore, for 2008, for both dorm residents and commuters, room and board expenses may be eligible for the Hope or Lifetime Learning tax credits.  (See Campusweb, www.cofo.edu –Financial Aid, or IRS Publication 970, Chapters 2, 3, and 6.)

Q7.      Are room and board scholarships taxable?  Yes.  Any scholarship used to pay for non-qualified expenses is considered taxable income to the student and should be reported on the tax return (including the Summer Work Program and any other room and board scholarship).  Please note the IRS does not require colleges to issue any type of form to students showing these taxable scholarship amounts.  Refer to the “Income Taxes” link in the Financial Aid Section at www.cofo.edu for more information.

Q8.      Who should I contact with questions?  For questions about the amounts reported on the 1098T, contact Student Accounts at ext. 2503 to set up an appointment.  College of the Ozarks cannot provide tax advice to students or parents. For questions about eligibility, filing for the tax credit, and the Midwest Disaster Area rules, consult Publication 970 (http://www.irs.gov/pub/irs-pdf/p970.pdf), the instructions for Form 8863, your tax advisor, or the IRS. 

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