Scholarships and 1098-T Reporting

By | August 7, 2017

 by Kelly Brennan

Does your institution offer scholarships or grants to students? How are they awarded? Are students awarded scholarships to your institution that are sponsored or paid for by third parties? You may be required to report the amounts awarded and paid to students in Box 5 of Form 1098-T.

Do I need to file a 1098-T?

You are required to file Form 1098-T if you are an eligible educational institution. You must file for each student you enroll and for whom a reportable transaction is made. An eligible educational institution is a college, university, vocational school, or other postsecondary educational institution that is described in section 481 of the Higher Education Act of 1965 as in effect on August 5, 1997, and that is eligible to participate in the Department of Education’s student aid programs. This includes most accredited public, nonprofit, and private postsecondary institutions.

What is Reported in Box 5 of Form 1098-T?

Box 5 of Form 1098-T reports the total amount of any scholarships or grants that were administered and processed during the calendar year for the payment of a student’s cost of attendance. This includes all payments received from third parties (excluding family members and loan proceeds). This amount also includes payments received from governmental and private entities such as the Department of Veteran Affairs, the Department of Defense, civic and religious organizations, and nonprofit entities.

A scholarship or grant is administered and processed by you if you receive payment of an amount, whether by check, cash, electronic transfer, or other means, which you know or reasonably should know is a scholarship or grant, regardless of whether the educational institution is named as payee or co-payee of the amount and (if a non-cash payment) regardless of whether the student endorses the check or other means of payment for the benefit of the institution. A Pell grant is an example of grant administered and processed by a college or university in all cases.

Summary

It is important to make sure your institution is meeting the 1098-T reporting requirements for scholarships and grants. If you have questions on how these requirements apply to your institution, please feel free to contact our team for assistance.

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