Tax Tips Logo ImageISSUE

We’ve been getting a lot of questions regarding Form 1098-T.  There are many different issues/nuances with this form.  Penalties can be as much as $260 per form if not filed in a timely manner.

SITUATION

Denali Christian College (DCC) is a private college exempt under Internal Revenue Code section 501(c)(3) and 170(b)(1)(A)(ii).  They are required to file Form 990 annually.

The CFO at DCC calls us to ask about providing Form 1098-T to nonresident alien students.

It is best to refer to the specific instructions for the Form 1098-T line items (especially Box 4).  On the surface, the rules state that you are not required to provide a Form 1098-T to a nonresident alien student “unless requested by the student.”

“Okay,” responds the DCC CFO,  “What if they do not have a TIN?  Or, is there a deadline for the date the request must be made?”

If they do not have a TIN, your institution could be subject to penalties if you did not make the required written TIN solicitation prior to December 31 of the year for which you are filing Form 1098-T.

As to the timing of the request, there does not appear to be guidance in this area.  Communication would be key.  In conclusion, the safe position is to communicate with nonresident alien students, make sure your institution meets the TIN request requirements, and, if they request a Form 1098-T – provide it.

RULES

From Form 1098-T instructions:

Exceptions. You do not have to file Form 1098-T or furnish a statement for

  • Nonresident alien students, unless requested by the student

From IRS Publication 4011:

Form 1098-T, Tuition Payments Statement – Academic institutions issue Form 1098-T to students who paid tuition during the tax year. This form helps the students calculate the educational credits. Since nonresident aliens usually cannot claim the educational credits, the form is not part of their tax return.

From NACUBO Advisory 18-06:

Foreign students—Your registrar or foreign student administrators may be able to help you identify these students, their visa type, and their status. Messages to these students should acknowledge that they are not U.S. residents and that they may or may not have a TIN. While institutions are not required to file 1098-Ts for nonresident aliens, many institutions do not maintain sufficient information in their student system to determine which international students are resident or nonresident aliens. You may want to allow these students to respond by indicating that they do not have a TIN and will not file a U.S. tax return.

 

BOTTOM LINE

  • The 2019 Form 1098-T instructions are not clear on some areas of compliance.
  • The instructions clearly note that Form 1098-T does not have to be provided to nonresident alien students unless they request the form.
  • Form 1098-T usually should not be integral to the annual individual income tax filings of nonresident alien students, however your institution should keep adequate records to distinguish resident alien students and nonresident alien students.
  • We will continue to provide information on Form 1098-T.

Specific questions? Email Dave Moja

The information provided herein presents general information and should not be relied on as accounting, tax, or legal advice when analyzing and resolving a specific tax issue. If you have specific questions regarding a particular fact situation, please consult with competent accounting, tax, and/or legal counsel about the facts and laws that apply.

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