Instruction 1098 E & T (Rev. 2002 )

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Page 1 of 4 Instructions for Forms 1098-E and 1098-T 10:20 - 29-MAY-2002

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Department of the Treasury

Internal Revenue Service

Instructions for Forms

1098-E and 1098-T

Section references are to the Internal Revenue Code.

• Magnetic media and electronic reporting requirements

What’s New for 2002

• Penalties

• When and where to file

Form 1098-E. Final Regulations section 1.6050S-3 issued in

• Taxpayer identification numbers

April 2002 describes the reporting rules for student loan interest

• Statements to recipients

payments. Issuers may use these rules in preparing Form

• Corrected and void returns

1098-E for 2002. The reporting under the prior optional

• Other general topics

instructions and the final regulations is the same. Therefore, the

You can get the general instructions from the IRS Web Site

optional specific instructions have been deleted.

at www.irs.gov or by calling 1-800-TAX-FORM

The Economic Growth and Tax Relief Reconciliation Act of

(1-800-829-3676).

2001 eliminated the 60-month limitation during which interest

paid on a qualified education loan is deductible.

Form W-9S. You may use Form W-9S, Request for Student’s

or Borrower’s Social Security Number and Certification, to

Box 2 is used to indicate that box 1 includes loan origination

obtain the student’s or borrower’s name, address, social

fees and/or capitalized interest. However, lenders are not

security number, and student loan certification to be used when

required to report loan origination fees and/or capitalized

filing Form 1098-E or 1098-T. Use of Form W-9S is optional;

interest for loans made before January 1, 2004. See

you may collect the information using your own forms, such as

Regulations section 1.6050S-3(e)(1).

financial aid applications, and procedures. You may collect the

Form 1098-T. The Optional Specific Instructions for Form

student’s or borrower’s information on paper or electronically.

1098-T were developed to reflect reporting rules described in

Electronic submission of Form W-9S. An educational

new Proposed Regulations section 1.6050S-1 issued in April

institution, insurer, or lender may establish a system for

2002. You may, but are not required to, use these rules in

students and borrowers to submit Form W-9S electronically,

preparing Form 1098-T for 2002. If you choose to comply with

including by fax. Generally, the electronic system must:

the reporting rules of Proposed Regulations section 1.6050S-1,

follow the Optional Specific Instructions for Form 1098-T on

1. Ensure the information received is the information sent

page ET-2.

and document all occasions of user access that result in the

submission.

Form 1098-T has been revised for 2002 under Proposed

2. Make reasonably certain the person accessing the

Regulations section 1.6050S-1 that describes rules for choosing

system and submitting the form is the person identified on Form

to report either the net amount of payments received (box 1), or

W-9S.

the net amount billed (box 2), for qualified tuition and related

3. Provide you with the same information as the paper Form

expenses during the calendar year. Adjustments made to

W-9S.

payments received, or amounts billed, for qualified expenses

4. Be able to supply a hard copy of the electronic Form

that were reported for a prior year will be reported separately

W-9S if the Internal Revenue Service requests it.

(box 3). Scholarships and grants will be reported (box 4) and

adjustments made during the year to scholarships reported for

Also, if an electronic Form W-9S is used to obtain the

a prior year are reported separately (box 5). If the amount

borrower’s certification that all the loan proceeds are solely

reported in box 1 or 2 includes payments received, or amounts

used to pay qualified higher education expenses, your

billed, for an academic period beginning in January through

electronic system must require, as the final entry in the

March of 2003, box 6 must be checked. An insurer may report

submission, an electronic signature by the borrower whose

reimbursements and refunds of qualified tuition and related

name is on Form W-9S. The signature authenticates and

expenses under an insurance contract (box 7). Boxes 4 and 5

verifies the submission. See Announcement 98-27, 1998-1

are renumbered 8 and 9. If you choose not to follow the

C.B. 865.

proposed regulations, you are required to comply with the

Specific Instructions for Form 1098-T on page ET-3.

Electronic recipient statements. With the consent of a

Specific Instructions for Form 1098-E

recipient, you may be able to furnish Copy B of the 2002 Forms

File Form 1098-E, Student Loan Interest Statement, if you

1098-E and 1098-T to that recipient electronically. See part H in

receive student loan interest of $600 or more from an individual

the 2002 General Instructions for Forms 1099, 1098, 5498,

during the year in the course of your trade or business.

and W-2G.

The $600 threshold applies to each borrower regardless of

Magnetic media/electronic reporting. For 2002, you are not

the number of student loans obtained by that borrower.

required to, but you may, file Forms 1098-E or 1098-T

However, you may file a separate Form 1098-E for each

magnetically or electronically.

student loan of the borrower, or you may file one Form 1098-E

Penalties. For 2002, no penalties will be imposed for failure to

for the interest from all student loans of the borrower.

file or failure to furnish correct Forms 1098-E or 1098-T if you

made a good faith effort to file and furnish them.

Who must file. File Form 1098-E if you are a financial

institution, governmental unit (or any of its subsidiary agencies),

Items To Note

educational institution, or any other person who receives

student loan interest of $600 or more from an individual during

General instructions. In addition to these specific instructions,

the year in the course of your trade or business.

you should also use the 2002 General Instructions for Forms

1099, 1098, 5498, and W-2G. Those general instructions If more than one person has a connection with the loan, only

include information about: the first person to receive the interest payment must file Form

Cat. No. 27990J

Page 2 of 4 Instructions for Forms 1098-E and 1098-T 10:20 - 29-MAY-2002

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1098-E. For example, a loan service or collection agent reporting requirements of Form 1098-T. A designated officer or

receiving payments on behalf of the lender must file. employee of the governmental entity must satisfy the reporting

requirements of Form 1098-T.

Qualified student loan. To be reportable for 2002, a student

loan must be either:

Eligible educational institutions may choose to report

• Subsidized, guaranteed, financed, or otherwise treated as a

payments received, or amounts billed, for qualified tuition and

student loan under a program of the Federal, state, or local

related expenses. The institution must use the same reporting

government, or of a post-secondary educational institution or

method for all calendar years unless the IRS grants permission

• Certified by the borrower as a student loan incurred solely to

to change the reporting method.

pay qualified higher education expenses. You may use Form

If another person receives or collects payments of qualified

W-9S to obtain the certification.

tuition and related expenses on your behalf, the other person

Revolving accounts. Report interest paid on revolving

must file Form 1098-T. However, if the other person does not

accounts, such as credit card accounts, only if the borrower

possess the information necessary to comply with the reporting

certifies that all the loan proceeds are solely used to pay

requirements of Form 1098-T, then you must satisfy the

qualified higher education expenses. You do not have to verify

reporting requirements of Form 1098-T.

the borrower’s actual use of the funds. Do not report interest on

If you are an insurer engaged in a trade or business of

mixed use loans.

making refunds or reimbursements of qualified tuition and

Loans under qualified plans. Do not report interest on loans

related expenses, you are not required, but may choose, to file

made under a qualified employer plan, as defined in section

Form 1098-T for 2002.

72(p)(4), or under a contract purchased under a qualified

Eligible educational institution. An eligible educational

employer plan within the meaning of section 72(p)(5).

institution is a college, university, vocational school, or other

Additional information. For more information about reporting

post-secondary educational institution that is described in

student loan interest, see Final Regulations section 1.6050S-3;

section 481 of the Higher Education Act of 1965; and that is

Notice 98-7, 1998-1 C.B. 339; Notice 98-54, 1998-2 C.B. 643;

eligible to participate in the Department of Education’s student

Notice 99-37, 1999-2 C.B. 124; and Notice 2000-62, 2000-2

aid programs. This includes most accredited public, nonprofit,

C.B. 587.

and private post-secondary institutions.

Statements to borrowers. If you are required to file Form

Qualified tuition and related expenses. Qualified tuition and

1098-E, you must provide a statement, on paper or

related expenses are tuition and fees a student must pay to be

electronically, to the borrower. For more information about the

enrolled at or attend an eligible educational institution. The

requirements to furnish a statement to the borrower, see part H

following are not qualified tuition and related expenses:

in the 2002 General Instructions for Forms 1099, 1098, 5498,

• Amounts paid for any course or other education involving

and W-2G.

sports, games, or hobbies unless the course or other education

Recipient’s/lender’s name, address, and telephone number

is part of the student’s degree program or is taken to acquire or

box. Enter the name, address, and telephone number of the

improve job skills.

filer of Form 1098-E. Use this same name and address on

• Charges and fees for room, board, insurance, transportation,

Form 1096, Annual Summary and Transmittal of U.S.

and similar personal, living, or family expenses.

Information Returns.

Academic credit. Academic credit is credit awarded by an

Borrower’s name and address box. Enter the name and

eligible educational institution for the completion of course work

address of the borrower.

leading to a post-secondary degree, certificate, or other

recognized post-secondary educational credential.

Box 1. Student Loan Interest Received by

Example. Student A, a medical doctor, takes a course at

Lender

University X’s medical school. Student A takes the course to

Enter the interest you received on a student loan(s) during the

fulfill State Y’s licensing requirement that medical doctors

calendar year. For loans made before January 1, 2004, you are

attend continuing medical education courses each year.

not required to but you may include loan origination fees and/or

Student A is not enrolled in a degree program at University X

capitalized interest in box 1 as described in Proposed

and takes the medical course through University X’s continuing

Regulations section 1.221-1(h)(2).

professional education program. University X does not award

Student A credit toward a post-secondary degree on an

Box 2. Checkbox

academic transcript for the completion of the course but gives

Check this box if loan origination fees and/or capitalized interest

Student A a certificate of attendance upon completion.

are reported in box 1.

University X is not required to file Form 1098-T for the course

taken by Student A.

Academic period. You must file Form 1098-T for each student

Optional Specific Instructions for Form

who is enrolled in your institution for any academic period (e.g.,

1098-T

semester, trimester, or quarter) beginning in 2002. Determine

your enrollment for each period under your own rules or use

File Form 1098-T, Tuition Payments Statement, if you are an

one of the following dates:

eligible educational institution. You must file for each student

• 30 days after the first day of the academic period,

you enroll and for whom a reportable transaction is made (see

• A date during the period when enrollment data must be

boxes 1 through 5 of Form 1098-T).

collected for purposes of the Integrated Postsecondary

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

Education Data System administered by the Department of

statement for:

Education, or

• Students enrolled during the year only in courses for which

• A date during the period when you must report enrollment

no academic credit is offered;

data to the state, to your governing board, or to some other

• Nonresident alien students, unless requested by the student;

external governing body.

• Students whose qualified tuition and related expenses are

Additional information. For more information about reporting

entirely waived or paid entirely with scholarships; and

on Form 1098-T, see Proposed Regulations section 1.6050S-1.

• Students whose qualified tuition and related expenses are

covered by a formal billing arrangement between an institution

Statements to students. If you are required to file Form

and the student’s employer.

1098-T, you must provide a statement, on paper or

Who must file. For 2002, you must file Form 1098-T if you are electronically, to the student. For more information about the

an eligible educational institution. An eligible educational requirements to furnish a statement to each student, see part H

institution that is a governmental unit, or an agency or in the 2002 General Instructions for Forms 1099, 1098, 5498,

instrumentality of a governmental unit, is subject to the and W-2G.

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Student’s address. In the student’s address box of Form

1098-T, enter the student’s permanent address. That is, enter

Specific Instructions for Form 1098-T

the student’s home or other long-term address where he or she

File Form 1098-T, Tuition Payments Statement, if you are an

can receive forwarded mail. You may use a temporary address

eligible educational institution that received payments for

only if you do not know the permanent address.

qualified tuition and related expenses or made reimbursements

or refunds of such amount in 2002. File Form 1098-T for each

Box 1. Payments Received for Qualified Tuition

student for whom you received the tuition or for whom you

and Related Expenses

made the reimbursement or refund. File only one Form 1098-T

If you choose this method of reporting, enter the amount of

for each student even if you received more than one tuition or

payments received for qualified tuition and related expenses

other payment or made more than one reimbursement during

from any source during the calendar year. The amount reported

the year.

is the total amount of payments received less any

Exceptions. You do not have to file Form 1098-T for students

reimbursements or refunds made during the calendar year that

enrolled during the year only in courses for which no academic

relate to the payments received for the same calendar year.

credit is offered. Also, you do not have to file Form 1098-T or

Box 2. Amounts Billed for Qualified Tuition and

furnish a statement for nonresident alien students, unless

requested by the student.

Related Expenses

Who must file. For 2002, you must file Form 1098-T if you are

If you choose this method of reporting, enter the amounts billed

an eligible educational institution that received qualified tuition

during the calendar year for qualified tuition and related

and related expenses in 2002. If you reimburse or refund tuition

expenses. The amount reported is the total amount billed less

or related expenses to a student during 2002 that equal or

any reductions in charges made during the calendar year that

exceed payments of qualified tuition and related expenses you

relate to the amounts billed for the same calendar year.

received on behalf of that student during 2002, you are not

Box 3. Adjustments Made for a Prior Year

required to file Form 1098-T. In addition, you are not required to

file for a student whose qualified tuition and related expenses

Payments received. Enter reimbursements or refunds of

were entirely waived or entirely paid with scholarships.

qualified tuition and related expenses made during the calendar

year that relate to payments received that were reported for a

If you are an insurer engaged in a trade or business of

prior year.

making payments of refunds or reimbursements of qualified

tuition and related expenses to individuals under an insurance

Amounts billed. Enter any reductions in charges made for

arrangement, you do not have to file Form 1098-T for 2002.

qualified tuition and related expenses made during the calendar

However, in future years, you may be required to report refunds

year that relate to amounts billed that were reported for a prior

or reimbursements (or similar amounts) of qualified tuition and

year.

related expenses on Form 1098-T.

Box 4. Scholarships or Grants

Eligible educational institution. An eligible educational

Enter the total amount of any scholarships or grants that you

institution is a college, university, vocational school, or other

administered and processed during the calendar year for the

post-secondary educational institution that is described in

payment of the student’s costs of attendance. However, see

section 481 of the Higher Education Act of 1965 and that is

Exceptions on page ET-2.

eligible to participate in the Department of Education’s student

aid programs. This includes most accredited public, nonprofit,

Box 5. Adjustments to Scholarships or Grants

and private post-secondary institutions.

for a Prior Year

Qualified tuition and related expenses. Qualified tuition and

Enter the amount of any reduction to the amount of

related expenses are tuition and fees a student must pay to be

scholarships or grants that were reported for a prior year.

enrolled at or attend an eligible educational institution. The

following are not qualified tuition and related expenses.

Box 6. Checkbox for Amounts for an Academic

1. Amounts paid for any course or other education involving

Period Beginning in January through March

sports, games, or hobbies unless the course or other education

of 2003

is part of the student’s degree program or is taken to acquire or

Check the box if any payments received, or amounts billed, for

improve job skills.

qualified tuition and related expenses reported for 2002 relate

2. Charges and fees for room, board, insurance,

to an academic period that begins in January through March

transportation, and similar personal, living, or family expenses.

of 2003.

Academic period. You must file Form 1098-T for each student

Box 7. Reimbursements or Refunds Under an

who is enrolled in your institution for any academic period (e.g.,

Insurance Contract

semester, trimester, or quarter) beginning in 2002. Determine

If you are an insurer that chooses to report for 2002, enter the

your enrollment for each period under your own rules or use

total amount of reimbursements or refunds of qualified tuition

one of the following dates:

and related expenses that you made for the student

• 30 days after the first day of the academic period,

during 2002.

• A date during the period when enrollment data must be

collected for purposes of the Integrated Postsecondary

Box 8. Check if at Least Half-Time Student

Education Data System administered by the Department of

Check this box if the student was at least a half-time student

Education, or

during any academic period that began in 2002. A half-time

• A date during the period when you must report enrollment

student is a student enrolled for at least half the full-time

data to the state, to your governing board, or to some other

academic workload for the course of study the student is

external governing body.

pursuing. Your institution’s standard for a half-time student

Additional information. For more information about reporting

workload must equal or exceed the standards established by

on Form 1098-T, see Notice 97-73, 1997-2 C.B. 335; Notice

the Department of Education under the Higher Education Act

98-46, 1998-2 C.B. 290; Notice 98-59, 1998-2 C.B. 689; Notice

and set forth in 34 C.F.R. section 674.2(b).

99-37, 1999-2 C.B. 124; and Notice 2000-62, 2000-2 C.B. 587.

Box 9. Check if a Graduate Student

Statements to students. If you are required to file Form

Check this box if the student was a graduate student. The 1098-T, you must provide a statement, on paper or

student is a graduate student if the student was enrolled in a electronically, to the student. For more information about the

program or programs leading to a graduate-level degree, requirements to furnish a statement to each student, see part H

graduate-level certificate, or other recognized graduate-level in the 2002 General Instructions for Forms 1099, 1098, 5498,

educational credential. and W-2G.

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The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Required for 2002. For 2002, you are required to report on the student is a student enrolled for at least half the full-time

form only the entity information, whether the student was at academic workload for the course of study the student is

least a half-time student (box 8), and whether the student was a pursuing as determined by the standards of your institution.

graduate student (box 9). No other information is required Your institution’s standard for a half-time student workload must

for 2002. See Box 8 and Box 9 below. equal or exceed the standards established by the Department

of Education under the Higher Education Act and set forth in 34

You are not required to but you may report the

C.F.R. section 674.2(b).

applicable amounts in boxes 1 through 7. If you choose

to report the information, follow the line instructions for

TIP

Box 9. Check if a Graduate Student

boxes 1 through 7 on page ET-3.

Check this box if the student was a graduate student. The

Student’s address. In the student’s address box of Form

student is a graduate student if the student was enrolled in a

1098-T, enter the student’s permanent address. That is, enter

program or programs leading to a graduate-level degree,

the student’s home or other long-term address where he or she

graduate-level certificate, or other recognized graduate-level

can receive forwarded mail. You may use a temporary address

educational credential.

only if you do not know the permanent address.

Box 8. Check if at Least Half-Time Student

Check this box if the student was at least a half-time student

during any academic period that began in 2002. A half-time

ET--4