Get the IRS 1098-C 2019-2020

So I have some bad news for you guys If you have been taking advantage of educationtax credits such as the American Opportunity Tax Credit or the Lifetime Learning creditchances are you or your tax preparer have been calculating it all wrong A few weeks ago we posted a video on taxdeductions for college students and in the comments we got a lot of questions about the1098-T and how you use the 1098-T to calculate your tax credit So this video is a follow-up to that video So if you havent seen that video go watchthat one first and come back to this one Its time to clear the air and learn howthis is supposed to go So heres how a lot of people think thecredit works You put in the information from your 1098-Tsubtracting your reported scholarships and grants in box 5 from the amount listed ineither box 1 or box 2 That should give you the net amount of qualifiedexpenses for which you can claim either the American Opportunity Tax Credit andor LifetimeLearning Credit right WRONG However this is what a lot of tax preparersdo and likely what many individuals do when filing taxes for themselves So heres the correct way Your American Opportunity Tax Credit andorLifetime Learning Credit are calculated on the Form 8863 And this is what it looks like Now in the instructions for the 8863 theIRS makes something very clear Generally qualified education expenses areamounts paid in 2018 for tuition and fees required for the students enrollment or attendanceat an eligible educational institution It doesnt matter whether the expenses werepaid in cash by check by credit or debit card or with borrowed funds The amount of qualified tuition and relatedexpenses reported on Form 1098-T may not reflect the total amount of the qualified tuitionand related expenses paid during the year for which you may claim an education tax credit You may include qualified tuition and relatedexpenses that are not reported on Form 1098-T when claiming one of these education benefitsif you can substantiate payment of these expenses You may not include expenses paid on the 1098-Tthat have been paid by qualified scholarships including those that were not processed bythe universities You may receive Form 1098-T from the institutionreporting payments received in 2018 box 1 However the amount in box 1 of Form 1098-Tmay be different from the amount you paid or are treated as having paid In completing Form 8863 use only the amountsyou actually paid plus any amounts youre treated as having paid in 2018 reducedas necessary as described under Adjusted Qualified Education Expenses later See chapters 2 and 3 of Pub 970 for moreinformation on Form 1098-TWhen doing your taxes your tax preparation software will often require you to replicatewhat is reported on Form 1098-T by filling in boxes 1 or 2 and 5 at a minimum EssentiallyBox 1 reports the amounts actually paid and Box 2 reports the amounts billed Unfortunately priorto 2018 the majority of schools used the amounts billed method and would fill out Box 2...