Education Credit Alert

In my blog writings and a short book (Education Tax Credit Essentials) I have indicated that taxpayers do not have to have a 1098T in order to claim an education credit. Currently, that is no longer the case. The new law was passed June 29, 2015 as part of the Trade Preferences Extension Act of 2015 and adds the following in IRC § 25A(g)(8):

PAYEE STATEMENT REQUIREMENT.—Except as otherwise provided by the Secretary, no credit shall be allowed under this section unless the taxpayer receives a statement furnished under section 6050S(d) which contains all of the information required by paragraph (2) thereof.

A similar requirement exists for the tuition deduction.

While taxpayers will now be required to have a 1098T, institutions are often not required to provide one. Until that is remedied, many taxpayers could be deprived of an education credit or deduction they would have otherwise been qualified for. I anticipate that the IRS will issue new regulations to reconcile the discrepancy, but there has been very little discussion of the change in the news and in trade publications and newsletters. I will discuss the issues related to this change in the future.

The requirement becomes effective for tax years following the date of enactment so it will not normally apply until the 2016 tax year.

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