Tax Resources: Information for Students   

  1. 1098-T - This form assists students in determining if they qualify for an educational tax credit based on amounts of qualified tuition expenses billed for the calendar tax year specified.
  2. Taxability of Scholarships
  3. Taxability of Fellowships 
  4. Taxability of Tuition Waivers or Remissions 

 

1098-T: Purpose and Function

The federal government provides 2 types of tax credits for educational expenses paid by you during the tax year. However, not all expenses you pay to the university are considered qualified expenses. In general tuition and fees that are directly related to your attendance and education are allowable. Room and board, books, insurance, and other personal expenses are generally not allowed. You should review the IRS publication 970 for more information--or you may consult your tax professional.

What is a 1098-T?

Educational institutions are required to report to students the amounts of qualified tuition expenses that were billed to them during the 2008 calendar year. This form will assist students in determining if they qualify for an educational tax credit.

***Note: The Controller's Office or University staff cannot assist you with tax matters. If you need assistance completing your taxes, you should consult with a qualified tax specialist or a CPA accounting firm. The following FAQ is provided to assist you with some of the general questions that you may have regarding the 1098T form and is not intended to be provided as advice in completing your tax return.

What do the amounts in each box indicate?

Box 1 is used for institutions who report on the amount paid by students. The University of North Florida does not report on amounts you paid, so box #1 will be blank on the form you receive from the University. You should keep your receipts and claim on your tax return the amount you paid out-of-pocket towards qualified educational expenses.

Box 2 reports the amount of qualified tuition and related expenses that were assessed to your account during the 2008 calendar year. The figure reported here is the amount the University assessed you for these fees and does not necessarily represent the amount you paid toward qualified expenses during this tax year. You should keep your receipts and claim on your tax return the amount you paid out-of-pocket towards qualified educational expenses.

Box 3 reports on whether or not the University has changed its reporting method. We have not.

Box 4 reports on any adjustments made during the 2008 tax year for qualified tuition and related expenses that were reported on a prior year 1098T. For most students this box will be blank.

Box 5 reports the amount of grants, waivers, and scholarships you received during the calendar year.

Box 6 reports the amount of any adjustments made during the 2008 tax year for grants, waivers and scholarships you received in a prior tax year.

Box 7 is checked to notify you and the IRS that some of the amount indicated in Box 2 relates to a semester that begins in the first quarter of 2009.

Box 8 will be checked if you were enrolled at least half-time for one semester.

Box 9 will be checked if you are a graduate student. This will identify you as already having a bachelor?s degree.

What is the difference between the Hope Scholarship and the Lifetime Learning Credit?

The Hope Scholarship is available for first & second year students only. If you meet the requirements as a student you may qualify for tax credits. You can claim 100% of the first $1000 you paid and 50% of the second $1000. (for example, if your expenses were $1500, your credit would be $1250). There is an income restriction and you should be aware that the credit is phased out for people in certain income tax brackets.

The Lifetime Learning tax credit is available to everyone. You may claim 20% of the first $10,000 paid ($2000 maximum) and that is per tax return, not per student. There are also income restrictions on the Lifetime Learning tax credit.

For more information on these credits, please refer to the U.S. Department of Education website at:http://www.ed.gov/offices/OPE/PPI/HOPE/index.html 

Do I report the amount in the Box 2 on my tax return?

NO. This is the amount that we are reporting to the IRS that we billed you for this during 2007, not that you paid that amount

I received scholarships, grants, or waivers. How do I calculate what I paid?

You need to keep your receipts for accurate reporting. You can stop into the cashier's office for duplicate receipts.

I lost or didn't receive my 1098T. Can I obtain another copy?

You can print another copy of your 1098T via myWings. Click on the Student/Academic tab, then "check your records" then "tax notification." If your grants, waivers and scholarships exceed your qualified tuition expenses, we will not mail you a 1098T. However, you can obtain one from myWings.

Who do I call for more information?

There are a number of places for you to go to obtain additional information. Please note that the staff at UNF cannot assist you in determining the amount you can claim for a tax credit. Your tax professional should be able to help you determine if you qualify. In addition, you can call the IRS for assistance. Their toll free number is 1-800-829-1040. The IRS also has a number of forms and publications that will help you. For instructions on the 1098T visit the IRS website at:http://www.irs.gov/pub/irs-pdf/i1098et.pdf 

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Taxability of Scholarships

A scholarship is an amount paid for the benefit of a student (usually an undergraduate student) at an educational institution to aid in the pursuit of studies. Recipients must not be required to perform past, present or future services for the grantor or the UNF Department in charge of administering the award. If services are required the payment is compensation for services performed that is subject to federal income tax withholding and also Social Security and Medicare (FICA) tax withholding.

Scholarship payments made to U.S. citizens are not subject to Social Security or Medicare tax (FICA). Scholarship payments in excess of required tuition, fees and books are fully taxable for income tax purposes; however, they are not subject to income tax withholding. Individuals receiving scholarship payments in excess of tuition, fees, books, supplies and other equipment required for courses are responsible for making quarterly estimated federal and state income tax payments, if needed. Scholarship payments made to non-resident aliens in excess of required tuition, fees and books are subject to special tax provisions and withholding under the Internal Revenue Code. All scholarship payments should be processed via Financial Aid in order to ensure proper withholding for non-resident aliens.

  • If the payment is made in consideration for past, present or future services, it is compensation for services.
  • If the payment represents payment for services that are subject to the direction or supervision of the University, it is compensation for services.

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Taxability of Fellowships

A fellowship is an amount paid for the benefit of an individual (usually a graduate student at an educational institution) to aid in the pursuit of study or research. To qualify as a fellowship, the payment must be a relatively disinterested, "no strings attached" educational grant with no requirement on the recipient's part to perform substantial services. A payment will qualify as a fellowship provided the University, as grantor will obtain no benefit, or only incidental benefit, as a result of the fellowship. If the University will receive more than incidental benefit, the payments are compensation for services performed that are subject to federal income tax withholding and also Social Security and Medicare (FICA) tax withholding. For example:

  • NIH training grants by definition are always classified as a fellowship.
  • Federal research grants generally provide funding for compensation for services.
  • Private instruction and research grants vary as to the nature of funding awarded (see guidelines below).
  • University general funds and endowment income funds generally provide funding for compensation for services (see guidelines below).
  • If the payment is made in consideration for past, present or future services, it is compensation for services.
  • If the payment represents payment for services that are subject to the direction or supervision of the University, it is compensation for services.

Guidelines for Fellowship Classification:

Fellowship Recipients: 

  • Are only required to submit progress reports
  • Determine activities based on the terms of the fellowship (may be assisted by faculty advisor)
  • Do not provide teaching, research or other services that will benefit the University

Student Employees: 

  • Are told by a University employee where, when and how to work
  • Perform work that is controlled or supervised by the University
  • Determine activities based on University needs/consultation with University representative (such as completing work on a University research grant)

Fellowship payments made to U.S. citizens are not subject to Social Security or Medicare tax (FICA). Fellowship payments are fully taxable for income tax purposes; however, they are not subject to income tax withholding. Individuals receiving fellowship payments are responsible for making quarterly estimated federal and state income tax payments, if needed. Fellowship payments made to non-resident aliens are subject to special tax provisions and withholding under the Internal Revenue Code. All Fellowship payments should be processed via Financial Aid in order to ensure proper withholding for non-resident aliens.

Tax Treatment of Scholarship and Fellowship Payments
(Table from IRS Publication 970 - Rev. Dec. 2004)

 

Payment for Degree Candidate Not a degree candidate
Tuition Tax Free Taxable
Fees Tax Free* Taxable
Books Tax Free* Taxable
Supplies Tax Free* Taxable
Equipment Tax Free* Taxable
Room Taxable Taxable
Board Taxable Taxable
Travel Taxable Taxable
Teaching Taxable** Taxable
Research Services Taxable** Taxable
Other Services Taxable** Taxable

 

* If required of all students in the course
** Does not include amounts received under the National Health Service Corps Scholarship Program or the Armed Forces Health Professions Scholarship and Financial Assistance Program.

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Taxability of Tuition Waivers or Remissions

The following tuition waivers must be reported to the Payroll Department:

  • Graduate waivers/remission for individuals not engaged in teaching or research.
  • Undergraduate or graduate waivers/remission for individuals receiving wages (Payroll) that are not "reasonable compensation" for services required to be performed in order to receive the waiver (see discussion below).

"Qualified tuition reductions", granted to employees of educational institutions are excluded from gross income, however the exclusion only applies to reductions in undergraduate tuition unless the recipient is engaged in teaching or research. Graduate waivers granted to individuals not engaged in teaching or research activities are taxable unless provided to an employee under a Section 127 educational assistance program.

Scholarship or fellowship grants represent payment for services (thus taxable income) when the grantor requires the recipient to perform services in return for the granting of the scholarship or fellowship. If only a portion of a scholarship or fellowship grant represents payment for services, the grantor must determine the amount of the scholarship or fellowship grant (including any reduction in tuition or related expenses) to be allocated to payment for services. The grantor must determine what is "reasonable compensation" or the fair market value of services required to be performed and treat the amount as wages subject to employment tax withholding. Suggestions for determining "reasonable compensation" are:

  • Amounts paid for similar services performed by students with qualifications comparable to those of the scholarship recipient, but who do not receive scholarship or fellowship grants;
  • Amounts paid for similar services performed by full-time or part-time employees of the grantor who are not students; and
  • Amounts paid by other educational organizations for similar services performed either by students or other employees.