Understanding the 1098-T Form
As a result of a recent legislative change, students now receive a form 1098-T in order to claim certain educational credits. The rules also now require 1098-T reporting for some students who were not previously included, such as those who receive full tuition scholarships or fellowships.
While Cornell staff are not legally able to provide tax advice because each student’s circumstances will be different, we can explain what you can expect to see in the boxes and what that information might mean. Only a trained, certified tax advisor can provide appropriate individual guidance for you.
Box 2 displays the total tuition costs and required fees. In this example, the tuition rate for the student’s degree program is 10,400 per semester. The 2016 1098-T form includes the fall 2016 semester that was billed in July, and the spring 2017 semester, that was billed in December. The spring 2016 semester is not included because that bill was in the prior tax year.
The bursar has explained that box 2 on the 1098-T form includes the sum of billed, qualified educational expenses. Some students who self-pay these expenses may be able to claim a tax credit such as the American Opportunity Credit, the Hope Credit, or the Lifetime Learning Credit, based on this amount. Student Health Plan costs are not included in box 2.
Box 5 displays the total of all scholarship and fellowship awards. In this example, which is typical for a students receiving a full fellowship in a STEM field with a summer fellowship, the awards posted to the students account during the 2016 tax year might include:
- Summer 2016 stipend $8704
- 2016-17 health insurance: $2560
- Fall 2016 stipend: $14499
- Fall 2016 tuition: $10400
- Spring 2017 stipend $14499
- Spring 2017 tuition $10400
Note: Bills for the spring semester are sent out by the university in the prior December, and spring-semester grants and fellowships are usually applied to the bill at that time. For a given tax year, box 2 and box 5 may include portion of the next spring semester bill. If a student’s spring semester fellowship award was changed after January 1st, that change would not be reflected in the current-year 1098-T but would instead be reflected in the next year’s form.
Students who receive scholarship or fellowship will see the sum of their eligible awards reported in box 5 on the 1098-T. Fellowship and scholarship support is generally tax-free when applied specifically to the cost of tuition, required fees, books and some required course supplies or equipment. Health insurance is not typically considered to be a “required fee” because at Cornell, like most universities, students must have insurance but not all students are required to buy the policy if they have another acceptable plan.
Perhaps you’ve seen online discussions suggesting that even experts don’t always agree on this. If you are working with a tax advisor you can refer her or him to University policy 1.3 on graduate assistantships. It describes how Cornell assistantships both require and provide coverage in the Student Health Plan, as a condition of the appointment, but not specifically as a condition of being a PhD student.
- Information on the 1098-T form at Cornell University
- About From 1098-T from the IRS
- Educational tax credits info from the IRS
- IRS guidance on choosing a tax advisor or preparer