1098T

[mcd1231]

Client received 1098T. Box 1 is $1,851 and Box 5 is $585.  The twist here is the tuition is paid by employer and the only time client has to pay is when the client fails to receive a passing grade.  So the amount in Box 5 is really the amount client paid to institution.  If I report the amount on 1098T as stated, client receives  $1,266 tuition and fees reduction from income.  Any help will be appreciated.  Thank you

[The-Tax-Lady]

I'm not sure what you are asking: if the box 5 is what the employer paid and box 1 is the actual tuition paid by the employee, your client, then you would enter it as you would any other 1098-T.

Box 5 is for money paid by others, scholarships, grants, employers etc., your clients payments are in box 1

If your question is, should your client receive the credit because the grade received was not high enough for the employer to reimburse the tuition, the grade is irrelevant to the credit eligibility.

As long as the other requirements on the Student worksheet are met, the client should be eligible for an Education credit. There is no question about passing or failing for eligibility purposes and plenty of parents and individuals receive ED credits, even though the person dropped out after the 1st semester.

I guess you could say you can get the credit for trying, not succeeding, as long as all the other requirements are met and your client actually paid the amount in box 1.

[mcd1231]

Box 1 is what the employer paid and Box 5 is what my client paid.  My thinking is why should my client get a $1,266 tuition and fees credit when she only paid $585.

[The-Tax-Lady]

Box 1 is what your client paid, Box 5 is scholarship, grants, employer paid money which reduces the amount in box 1. The result is what the ED credit is calculated on. Always enter the 1098-T info first and the Student worksheet will take care of the rest..

[George4Tacks]

When in doubt, DO THE RIGHT THING.

[mcd1231]

no, just the opposite.  Box 1 is what the employer paid $1,851 and Box 5 is what the employee (my client) paid

[The-Tax-Lady]

Actually, Box 1 is simply the total received by the college. 

[mcd1231]

right paid by my client's employer

[The-Tax-Lady]

If the Employer paid the entire amount, then Box 5 and Box 1 should be equal and the 1098-T is incorrect.

Do you have a copy of the Student Account from the college which shows the detail of charges and payments. Did your client receive any other grant or scholarship money, like Pell etc.

[mcd1231]

She did not receive any other grant or scholarship money.

[The-Tax-Lady]

OK, but the amount in Box 5 should never be what the student has paid, how are you determining this $$ in box 5 was paid by the client?

[mcd1231]

Client told me box 5 is what she paid $585

[The-Tax-Lady · Accepted solution]

And the IRS says Box 5 is Scholarships & Grants.

Clients are very often mistaken in their beliefs of what and how something was paid. Does the client have proof of payment or the Student Account statement from the college?

If the client's documentation confirms what they are telling you, then the 1098-T is wrong and must be corrected.

[sjrcpa]

1098-Ts are frequently wrong. I doubt taxpayer can get a corrected one, especially now.

[mcd1231]

Thank you for your help and insight.