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Old 08-20-2013, 03:10 PM
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Join Date: Aug 2013
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Verifying Claimed Education Credit

Hi all,

I recently received a letter from the IRS informing me that they could not verify my education credits. First some thing about me to help set the situation:

1) I used TurboTax to file
2) I claimed the Lifetime Learning Credit only (I was enrolled full-time in medical school at qualified school)
3) My 1098-T box 1 is blank (the school says they never fill out box 1
4) My 1098-T box 2 is $42,964.50

Verbatim from the IRS letter:
Education Credits
We need to verify the education credits claimed on Form 1040 line(s) 49 and/or 66, or on Form 1040A line(s) 31 and/or 40. Your eligible educational institution did not verify the amount claimed on your tax return, in box 1 of Form(s) 1098-T, Tuitions Statement. Please provide a signed explanation of the amounts paid to support the amount(s) claimed.
Box 1 of my 1098-T is blank (I still have the document in my files) and I was told that this is standard across most schools. TurboTax asked me to enter the number from either box 1 or box 2 onto my tax return.

The IRS is asking me to pay $2,000 (which correlates to the $2,000 credit I received)

Should I just send them a copy of the 1098-T in my possession to clear this up? Or did I actually do something wrong?

Thanks for the help!



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Old 08-22-2013, 09:34 AM
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Posts: 5,227
Quote:
Originally Posted by Seamus520 View Post

#1;Box 1 of my 1098-T is blank (I still have the document in my files) and I was told that this is standard across most schools. TurboTax asked me to enter the number from either box 1 or box 2 onto my tax return.

#2;The IRS is asking me to pay $2,000 (which correlates to the $2,000 credit I received)

Should I just send them a copy of the 1098-T in my possession to clear this up? Or did I actually do something wrong?

Thanks for the help!
#1;As the school left Box 1 blank and you claim it on your tax return, the IRS will not accept it. One reason this happens is that some people pay Spring semester's tuition (Jan - May) in December of the previous year. You need to check your 2012 1098-T to see if they included the amount for Spring 2012 in 2011's amount. In that case, you still cannot claim it, as it would have already showed up on your 2011 tax return.So, they would leave it blank if there was nothing to report, they don't simply decide not to enter anything in that box there would be no point to sending you the 1098 T.

#2; This is common on 1098Ts. If you are using software after you fill out the info from the 1098T it will ask you for "actual expenses paid". You enter what you paid in 2011. Do not enter the actual expenses while filling in the softwares form 1098T because you have to enter only what's on the 1098T. So leave box 1 blank - the software will prompt you after the fact for the amount. Please contact a CPA/ an IRS EA in your local area for more info in detail.



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Old 08-23-2013, 09:28 AM
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Quote:
Originally Posted by Wnhough View Post
#1;As the school left Box 1 blank and you claim it on your tax return, the IRS will not accept it. One reason this happens is that some people pay Spring semester's tuition (Jan - May) in December of the previous year. You need to check your 2012 1098-T to see if they included the amount for Spring 2012 in 2011's amount. In that case, you still cannot claim it, as it would have already showed up on your 2011 tax return.So, they would leave it blank if there was nothing to report, they don't simply decide not to enter anything in that box there would be no point to sending you the 1098 T.
Thanks for the reply. My school said:
The IRS allows universities to report either Payments Received (Box 1 on the 1098-T) or Amounts Billed (Box 2 on the 1098-T). Like most schools, the university has elected to report the amounts billed (qualified tuition and related expenses) to the student for the tax year. No amounts will be reported in Box 1 of the 1098-T.

Box 2 of the 1098-T includes all qualified items that were actually billed during the 2013 calendar year.

Information will be reported in Boxes 2 through 10 of the 1098-T only if they pertained to the student during the 2013 calendar year.
Is that helpful?



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Old 08-23-2013, 10:18 AM
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Join Date: Oct 2010
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Quote:
Originally Posted by Seamus520 View Post
Thanks for the reply. My school said:



#1:The IRS allows universities to report either Payments Received (Box 1 on the 1098-T) or Amounts Billed (Box 2 on the 1098-T). Like most schools, the university has elected to report the amounts billed (qualified tuition and related expenses) to the student for the tax year. No amounts will be reported in Box 1 of the 1098-T.


#2:Box 2 of the 1098-T includes all qualified items that were actually billed during the 2013 calendar year.

Information will be reported in Boxes 2 through 10 of the 1098-T only if they pertained to the student during the 2013 calendar year.
Is that helpful?

#1;I guess so. It is usually noted on the form that the school can decide to use either1 or 2;it is for the benefit of the school. They can use either Box 1 or Box 2 depending on how they keep their records ; I'm ALSO guessing box 1 "amounts paid" would relate to cash basis taxpayer. Box 2 for accrual. Since most taxpayers are cash basis , they use box 1, but remember it includes amounts received from all sources.As you can see, box 1 shows the total payments received from any source for qualified tuition and related expenses less any related reimbursements or refunds. The IRS instructs institutions to report either payments received Box 1 or amounts billed for qualified tuition and related expenses Box 2 on the 1098-T. Ypur school, I guess, reports qualified tuition and related expenses that were billed during the tax year and scholarships and grants, therefore, Box 1 – Payments Received for Qualified Tuition and Related Expenses, is empty.



#2; Box 2 indicates the total amounts billed for qualified tuition and related expenses less any related reductions in charges. The amount shown in box 2 for qualified tuition and related expenses billed during the calendar year may represent an amount that is different from the amount actually paid during the calendar year, although for many students the amounts will be the same, you may not be able to take a tuition and fee deduction or claim an education credit with respect to the entire amount billed and reported in box 2. You may take a tuition and fee deduction or claim an education tax credit only with respect to qualified tuition and related expenses actually paid during the calendar year. For more information regarding the qualified educational expenses please contact a CPA/ an IRS EA in your local area for more info in detail.



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