Everything You Need to Know About the 1098-E and 1098-T Tax Forms
The annual tax-filing deadline can be stressful for college students and graduates, especially with the recent changes to the United States tax code. However, you can take comfort in knowing that some of the money you’ve put toward your education will come back to you in the form of deductions or tax credits.
In order to reap those benefits, you must familiarize yourself with two key documents: the 1098-E Student Loan Interest Statement and the 1098-T Tuition Statement. Knowing what these forms are for and what to do with them is essential come tax time.
Tips for Understanding the 1098-E Form
First, we’ll begin by looking at five important things to know about the 1098-E form.
1. What is the 1098-E form?
The 1098-E Student Loan Interest Statement is provided by your lender(s) either electronically or by mail and shows how much interest you have paid on your student loan(s). You will receive this form if you have paid interest of $600 or more for the tax year. The total amount of interest will be located in Box 1 of the 1098-E form. For loans taken out before September 1, 2004, Box 2 will be checked. This check is an indication that Box 1 does not include loan origination fees and/or capitalized interest.
2. What does the 1098-E form look like?
The Internal Revenue Service has sample copies of the 1098-E form available online, with information about all of the fields included on the form (such as the aforementioned Box 1 and 2) and provides instructions for borrowers and lenders.
3. What is the maximum student loan interest deduction?
The Internal Revenue Service has set the maximum interest deduction at $2,500 per tax year, regardless of how much interest you paid for the year.
4. When can’t I take the deduction?
There are stipulations that can impact your student loan interest deduction. You cannot take the deduction if your Modified Adjusted Gross Income (MAGI) exceeds $80,000 on your tax return (or $165,000 if you are filing a joint return). You will also be unable to take the deduction if you are married but filing your taxes separately.
5. Where do I enter my 1098-E information?
Your student loan interest is reported on the standard Internal Revenue Service tax form: Form 1040, Line 33.
If you have additional questions about your 1098-E form, you can contact the Federal Student Aid Information Center at 1-800-4-FED-AID (1-800-433-3243; TTY 1-800-730-8913).
Tips for Understanding the 1098-T Form
Now, here are five important things you need to know about your 1098-T form.
1. What is the 1098-T form?
The 1098-T Tuition Statement reports expenses you paid for college tuition that might entitle you to an adjustment to income or a tax credit. Ashford University is responsible for sending the 1098-T form to its students by January 31, with the Internal Revenue Service also receiving a copy. Students whose tuition and fees are entirely paid for by scholarships or through an employer or government entity, such as the Department of Veterans Affairs, will not receive a 1098-T form.
2. What expenses qualify?
Tuition, fees, and money you paid for your course materials are among the qualified expenses for which you may receive reimbursement at tax time. You can deduct up to $4,000, but must decide whether to claim the Tuition & Fees Deduction or take one of two credits: the American Opportunity Tax Credit, of which you receive a tax credit of $2,500 for qualified expenses; or the Lifetime Learning Credit, which allows for a maximum credit of $2,000 per return.
3. Can I access my 1098-T form online?
Yes. To download your 1098-T statement, log into your Ashford Student Portal and select “View 1098-T” under the “My Finances” heading.
4. What do the boxes on my 1098-T form mean?
The Internal Revenue Service has a helpful document to walk you through each of the 10 boxes on the 1098-T form. It covers everything from the total of what you paid for tuition and other expenses (Box 1) to your status as a graduate student (Box 9), if applicable.
5. Where do I enter my 1098-T information?
If you’re doing your taxes online, the company that you’re using will have a place for you to enter the information from your 1098-T form. After you’ve entered your qualifying expenses, you can claim an education credit from the aforementioned options: the American Opportunity Tax Credit, Lifetime Learning Credit, or Tuition & Fees Deduction. It is important to research all three options before making a determination on your taxes. The tuition and fees deduction can also be found on Form 1040, Line 34.
If you have questions regarding your available tax incentives, you should consult with a qualified tax professional or contact the Internal Revenue Service Taxpayer Assistance line at 1.800.829.1040.
By Ashford University staff