Box 1 Calculations

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1098-T Calculation Logic  (8 min.)

Box 1 reporting requires the filing institution to distinguish payments for qualified tuition and related expenses from payments for non-qualified payments such as room, board, and living expenses.

Box 1. Payments Received for Qualified Tuition and Related Expenses

Enter the total amount of payments received for qualified tuition and related expenses from all sources during the calendar year. The amount reported is the total amount of payments received less any reimbursements or refunds made during the calendar year that relate to the payments received for qualified tuition and related expenses during the same calendar year. The amount reported is not reduced by scholarships and grants reported in box 5. Include in this box the receipt of a payment of past-due qualified tuition or related expenses from a previous calendar year, but only if the educational institution previously billed the student for such amount(s).

Excerpt of IRS Instructions for Forms 1098-E and 1098-T (2021, 2022)

The 1098-T process in Anthology Student calculates the Box 1 value of the student's 1098-T forms using the following logic.

  1. It calculates the sum of all Prior Year Eligible (QTRE) Charges (less reductions of charges) from the beginning of the student's career to Dec 31 of the year prior to the tax year being reported.

  2. It calculates the sum of all Previous Years Payments (less Refunds and Stipends) that are eligible from the beginning of the student's career to Dec 31 of the year prior to the tax year being reported. This includes Fund Sources where the "Include Fund Source in 1098-T Calculations" attribute is TRUE.

  3. It subtracts the sum of the Previous Years Payments from the sum of all Prior Year Eligible (QTRE) Charges to determine the Carryover Charge. If the result is negative (payments > charges), the Carryover Charge will be zero.

  4. It adds the value of the Carryover Charge to the Current Year Charges.

The system logic goes back to the beginning of the program, calculates all program charges, then subtracts all payments before the first day of the new reporting period to determine the prior period charges to carry forward and add to the current year charges.

Beginning Balance

To accommodate institutions who previously used other systems to create 1098-T statements and did not migrate all of their students' early accounting records to Anthology Student, a beginning balance needs to be determined. The 1098-T process will use the beginning balance as a starting point when calculating Carryover Charges.

To determine the beginning balance, institutions who are migrating to Anthology Student need to provide:

  • The date after which the transactions have Bill Codes, Fund Sources, and other formatting required to enable 1098-T processing in Anthology Student. This date will be the Beginning Balance Date.

  • The Beginning Balance Amount as of the Beginning Balance Date.

The beginning balance data will be inserted into the Anthology Student database by Anthology Inc..

The 1098-T process in Anthology Student will add the Beginning Balance amount to the sum of all Prior Year Eligible (QTRE) Charges value and execute the logic described in steps a) through d).

The Beginning Balance Amount will be displayed on the Student Details form under Amounts Billed.

Note:

  • Students who had accounting transactions prior to the Beginning Balance Date but did not have an unpaid balance will have a Balance Forward Amount of zero.

  • Students whose first accounting transaction with the institution occurred after the Beginning Balance Date will not need a 1098-T Balance Transfer record.

Calculation of Payments for Box 1 Reporting

Definitions
Term Description
Current Year Charges All current year Eligible 1098-T charges where the “Include 1098-T” flag is true. (Prior Year eligible 1098-T charges are not included in Current Year Charges.)

Current Year Charges are reduced by adjustments to charges that occurred in the current year.
Current Year Payments All current year payments, except Scholarship or Grant payments which are only included as a payment if the fund source is defined by the Fund Source 1098-T attribute — "Include Fund Source in 1098-T Calculations" being checked.

Current Year Payments are reduced by Current Year Refunds and Stipends.

Current Year Refunds All current year refunds, except Scholarship or Grant refunds which are only included as a refund if the fund source is defined by the Fund Source 1098-T attribute — "Include Fund Source in 1098-T Calculations" being checked.
Prior Year Charges All prior year Eligible 1098-T charges where the “Include 1098-T” flag is true. (This year’s eligible 1098-T charges are not included in Prior Year Charges.)

Prior Year Charges are reduced by adjustments to charges that occurred prior to the current year OR adjustments to charges for the current year which have the ‘Previous Year’ flag is checked.
Prior Year Payments All previous year payments, except Scholarship or Grant payments which are only included as a payment if the fund source is defined by the Fund Source 1098-T attribute — "Include Fund Source in 1098-T Calculations" being checked.

Prior Year Payments are reduced by Refunds that occurred prior to the current year OR Refunds made in the current year which have the ‘Previous Year’ flag is checked.

Stipend transactions made in Prior Years or Voided Stipend transaction made in the current year that are associated with a prior year’s Stipend Payment will be included in the Prior Year Payments total.
Prior Year Refunds All refunds from previous years, except Scholarship or Grant refunds which are only included as a refund if the fund source is defined by the Fund Source 1098-T attribute— "Include Fund Source in 1098-T Calculations" being checked.
Carry Over Amount Carry Over Amount = Prior Year Charges – (Prior Year Payments + Prior Year Refunds)

Note: The Carry Over Amount will be set to zero if the calculation yields a negative number.

Logic to Determine Prior Year Charges

When Box 1 reporting is used, the logic to determine prior year charges that have not yet been satisfied instructs the 1098-T process to perform following steps:

  1. Gather all prior year Eligible 1098-T charges. (Do not include this year’s eligible 1098-T charges).

  2. Subtract all previous year's payments, except when the payment is a Scholarship or Grant only include the payment if the fund source is defined by the Fund Source 1098-T Attribute - "Include Fund Source in 1098-T Calculations" must be checked.

  3. Add back to this amount any refunds that were made in the current year. Include refunds that were made in the current year and that have the "Previous Year" year column checked.

  4. The amount computed in Step 2 is the Carryover of Charges not satisfied in previous years.

    If it is negative, then it is zero (no negative amounts).

  5. Gather all Current Year Payments, except when the payment is a Scholarship or Grant only include the payment if the fund source is defined by the Fund Source 1098-T Attribute - "Include Fund Source in 1098-T Calculations" must be checked.

  6. Gather this year's Current Charges (Eligible 1098-T charges).

  7. The Box 1 calculation is then performed using the following formula:

    If Current Year Payments <= Current Year Charges + Carry Over Charges, THEN
    Box 1 = Current Year Payments
    ELSE
    Box 1 = Current Year Charges + Carry Over Charges
    End If

Important Important
  Stipend transactions made in the current year are included in Payment or Refund calculations.

Stipend transactions made in Prior Years or Stipend Void transactions that were made in the current year for Stipend Payments that occurred in a prior year will be included in the Prior Year Payments total.

Notes:

  • The institution may only report payments in the year in which they were received.

  • It is critical that the Include in 1098-T Calculations option is selected appropriately on the fund source Code configuration in Anthology Student.

    The Include in 1098-T Calculations check box is enabled for fund source types of IASG, Scholarship, Other, Pell, TEACH,or Grant. Select or clear this check box to indicate whether the fund source shall be included in the 1098-T calculation for scholarships and grants (see Configure Fund Sources).

    Fund sources for grants/scholarships must have the Is this a Scholarship/Grant check box selected for the fund source to be included in the 1098-T batch. This check box is only enabled for fund source types that are Other Outside Resources.

  • It is also important that refunds for previous year payments are identified since a refund made this year will reduce this year’s Box 1 Total unless it is flagged as being associated with a previous year. Use the Cleanup Tool to identify and select corresponding records. Note the check boxes in the Include 1098-T and Previous Year columns.

Sample Box 1 Calculations

Student A

This student has the following Ledger transactions:

Ledger Transactions
Date Type Description Amount 1098-T Eligible
8/12/2019 I Tuition Billing $17,075.00 Y
8/12/2019 I Facilities & Technology Fee $150.00 Y
8/14/2019 I Housing Fee $2,490.00 N
8/14/2019 I Meal Plan $2,329.00 N
8/17/2019 P Pell Grant $2,174.00 N/A
8/17/2019 P Direct Loan $8,950.00 N/A
9/15/2019 P Student Payment $5,000.00 N/A
1/8/2020 P Student Payment $4,655.00 N/A
1/10/2020 I Tuition Billing $17,075.00 Y
1/10/2020 I Facilities & Technology Fee $150.00 Y
1/10/2020 I Housing Fee $2,490.00 N
1/10/2020 I Meal Plan $2,329.00 N
1/12/2020 P Pell Grant $2,174.00 N/A
1/11/2020 P Direct Loan $8,950.00 N/A
1/15/2020 P Student Payment $10,000.00 N/A
2/15/2020 Credit Tuition Adjustment $1,500.00 N/A
1098-T Calculation
Item Calculation Notes
Prior Year Charges 17,075.00 + 150.00 = $17,225.00 Charges must be 1098-T eligible.
Prior Year Payments 2,174.00 + 8,950.00 + 5,000.00 = $16124.00  
Carry Over Charges = Prior Year Charges – Prior Year Payments 17,225.00 – 16,124.00 = $1101.00  
Current Year Charges: 17,075.00 + 150.00 – $1, 500.00 = $15,725.00 Credit transaction of $1,500.00 reduces Current Year Charges.
Current Year Payments: 4,655 + 2,174 + 8,950 + 10,000 = $25,779.00  
Carry Over Charges + Current Year Charges 1,101.00 + 15,725.00 = $16,826  

Box 1 is the lessor of Current Year Payments or (Carry Over Charges + Current Year Charges); therefore Box 1 = $16,826.00.

Student B

This student has the following Ledger transactions:

Ledger Transactions
Date Type Description Amount 1098-T Eligible
8/12/2019 I Tuition Billing $17,225.00 Y
8/14/2019 I Housing Fee $4,819.00 N
8/27/2019 P Federal Loan 15-16 $6,194.00 N/A
8/27/2019 P Outside Scholarship Payment $750.00 N/A
8/28/2020 P Housing Grant $1,500.00 N
8/30/2019 P Discover Bank Loan $13,000.00 N/A
9/15/2019 P Stipend to Student -$1,719.00 N
1/10/2020 I Tuition Billing $17,225.00 Y
1/10/2020 I Housing Fee $4,819.00 N
1/12/2020 P Federal Subsidized Loan $5,194.00 N/A
1/12/2020 P Outside Scholarship Payment $450.00 N/A
1/15/2020 P Discover Bank Loan $13,000.00 N/A
1/31/2020 P Stipend to Student -$1,419.00 N/A
8/10/2020 I Tuition Billing $17,225.00 Y
8/10/2020 I Housing Fee $4,819.00 N
9/12/2020 P Federal Subsidized Loan $6,184.00 N/A
9/12/2020 P Outside Scholarship Payment $450.00 N/A
9/15/2020 P Discover Bank Loan $8,000.00 N/A
9/16/2020 P Housing Grant $1,500.00 N
10/1/2020 Debit Tuition Surcharge $125.00 Y
1098-T Calculation
Item Calculation Notes
Prior Year Charges $17,225.00 Charges must be 1098-T eligible
Prior Year Payments 6,194.00 +750.00 + 13,000.00 + 1,719.00= $21,663.00 Stipends are included in 1098-T calculations for Prior Year Payments.
The Housing Grant is designated to be applied to Housing only and therefore is designated as not 1098-T eligible.
Carry Over Charges = Prior Year Charges – Prior Year Payments 17,225.00 – 18,225.00 = $-1000.00 Negative Carry Over Charges value evaluates to $0.00.
Current Year Charges 17,225.00 + 17,225.00 + 125.00 = $34,575.00  
Current Year Payments 5,194.00 + 450.00 +13,000.00 - 1,419.00 + 6,184.00 + 450.00 +8,000.00 = $31,859.00 Stipends are included in 1098-T calculations for Current Year Payments.
Carry Over Charges + Current Year Charges 0.00 + 34,575.00 = $34,575.00  

Box 1 is the lessor of Current Year Payments or (Carry Over Charges + Current Year Charges); therefore Box 1 = $31,859.00.

Box 4 Correction When Box 1 Has a Negative Amount

Perform the following steps to correct the Box 4 value when a student's 1098-T has a negative amount in Box 1.

  1. Select the Processes tile > expand IRS 1098-T > select Manage Batches in the tree.

  2. On the Selection Criteria tab of the Manage Batches form, select the batch and click the View Individuals button.

  3. Click the Add Student button in the grid toolbar.

  4. In the Select Student dialog, search for the affected student by name or select the student in the grid.

  5. Click the Modify Details button in the grid toolbar.

  6. Click Edit Calculated Amounts button.

  7. Manually enter the correct amount in the Previous Year Scholarships/Payments Adjustment (Box 4) field.

  8. Save the record.