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Form 1098-T is the IRS information return educational institutions file to report qualified tuition and related expenses for each enrolled student. Getting it right matters for two reasons: students depend on it to claim the American Opportunity Credit or Lifetime Learning Credit, and the IRS uses it to match those credit claims against what institutions reported. Errors don’t just create compliance exposure for the institution — they can delay or disallow tax benefits for students.
Here are the mistakes that create the most problems, and how to avoid them.
1. Wrong or Missing Student TIN
The student’s taxpayer identification number — typically their Social Security number — is the field the IRS uses to match the 1098-T to the student’s return. A transposed digit, a missing number, or an outdated SSN from a prior enrollment record will trigger an IRS mismatch.
How to avoid it: Use Form W-9S — or an equivalent institutional form such as an enrollment or financial aid application — to collect or confirm each student’s TIN before filing. Don’t assume the number in your SIS or financial aid system is current, particularly for returning students whose records may not have been updated in years.
2. Reporting the Wrong Dollar Amount in Box 1
Box 1 reports the total payments received for qualified tuition and related expenses during the calendar year — not amounts billed, not aid disbursed, and not total charges. The most common error is pulling from the wrong ledger: tuition payments and scholarship disbursements are separate transactions, and their interaction requires care.
How to avoid it: Box 1 should reflect actual payments received during the calendar year for qualified expenses. Scholarships and grants are reported separately in Box 5. Review your reporting logic against the IRS instructions for Form 1098-T each filing season, as institutional billing systems don’t always align cleanly with the IRS definition of “qualified tuition and related expenses.”
3. Misreporting Scholarships and Grants in Box 5
Box 5 requires reporting the total scholarships or grants administered and processed by your institution during the year, including amounts from government programs, private sources, and veterans’ benefits. Omitting third-party scholarships, or netting them against tuition instead of reporting them gross, is a recurring error.
How to avoid it: Report all scholarships and grants gross in Box 5. Do not subtract them from the Box 1 payment amount — both boxes are reported independently. If your institution received aid on behalf of students that it then applied to their account, that amount belongs in Box 5.
4. Missing the Student Copy Deadline
For Tax Year 2025, institutions must furnish Form 1098-T to students by February 2, 2026. This is a hard deadline — missing it exposes institutions to a separate penalty per return, independent of the IRS filing deadline.
How to avoid it: Build backward from the student copy deadline, not the IRS filing deadline. Students need their 1098-T to file their own tax returns, and many file early. Electronic delivery is permitted if the student has consented in advance and you follow IRS e-delivery requirements.
5. Missing the IRS Filing Deadline
The deadlines for filing Form 1098-T with the IRS for Tax Year 2025 are:
- Paper filing: February 28 (March 2, 2026, since the 28th falls on a Saturday)
- Electronic filing: March 31, 2026
Note: If your institution files 10 or more information returns of any type during the year, electronic filing is mandatory — paper is not an option regardless of preference.
How to avoid it: Know your filing method and plan accordingly. The e-file deadline gives you nearly a month beyond the paper deadline, which is one reason institutions with large student populations typically file electronically even when not required to do so.
6. Not E-Filing When Required
The 10-return e-file threshold applies across all information return types in aggregate — not per form type. An institution filing 8 Forms 1098-T and 4 Forms 1099 has crossed the threshold and must e-file all of them. Filing on paper when e-file is required carries a penalty of $340 per return.
How to avoid it: Count your total information return volume across all form types before choosing a filing method. If you’re close to the threshold, e-file regardless — the risk of a per-return penalty on a large volume of forms is significant.
7. Not Filing a Corrected Form When Errors Are Found
Institutions sometimes discover errors after filing — a wrong TIN, an incorrect Box 1 amount, a missing scholarship — and assume the window has passed. It hasn’t. Corrected Forms 1098-T can and should be filed, and providing a corrected student copy promptly can protect students from IRS notices or delayed credits.
How to avoid it: When errors are found post-filing, file a corrected 1098-T with the IRS and furnish a corrected copy to the student. Mark the corrected checkbox on the form. The sooner corrections are filed, the lower the penalty exposure.
IRS Penalty Structure (Tax Year 2025)
The penalties for late or incorrect 1098-T filings escalate the longer they go unresolved:
| Timing | Penalty Per Return |
|---|---|
| Filed within 30 days of deadline | $60 |
| Filed more than 30 days late but by August 1 | $130 |
| Filed after August 1, or not filed | $340 |
| Intentional disregard | $680 minimum (no cap; can be 10% of aggregate unreported amount) |
These penalties apply separately for the IRS copy and the student copy, so a single missed or incorrect return can generate two penalties. For institutions filing large volumes of 1098-Ts, the cumulative exposure from systematic errors can be substantial.
Steps to Tighten Your Process
Validate TINs early. Run TIN validation against IRS records before filing season opens — don’t discover mismatches after the deadline.
Audit your reporting logic annually. The IRS instructions for Form 1098-T are updated each year. Box definitions and reporting requirements have changed before, and your institution’s billing system may not automatically reflect those changes.
Confirm e-delivery consent. If your institution delivers 1098-Ts electronically, confirm that each student has affirmatively consented per IRS requirements. Sending electronically without consent does not satisfy the furnishing requirement.
Set internal deadlines before the IRS deadlines. The student copy deadline (February 2) should trigger your internal review process, not the IRS filing deadline. Build in time for QA, corrections, and reprocessing.
How Tab Service Handles 1098-T Filing
Tab Service Company processes Form 1098-T filings for higher education institutions nationwide. Our TAB1098-T service handles data intake, validation, IRS e-filing, and student copy distribution — including print and mail or electronic delivery with consent management.
For institutions managing high student volumes, the combination of deadline pressure, data complexity, and penalty exposure makes 1098-T processing a strong candidate for outsourcing to a specialized provider. We’ve been doing this for decades, and we stay current with IRS requirements — backed by SOC 2 Type II compliance and independent security audits — so your compliance team doesn’t have to track every change.
Learn more about TAB1098-T or contact us to discuss your institution’s filing needs.
