Appendix D - Providing Tax Forms to Students - IRS Form 1098/1098-T/1042-S Guidance

Sep 19, 2026

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Appendix D explains two IRS reporting requirements that Title IV participating schools must meet: providing IRS Form 1098 (either 1098-E for student loan interest when $600+ is received, or 1098-T for tuition statements for credit-enrolled students with reportable transactions) and generating Form 1042-S for nonresident aliens receiving taxable income other than wages. It details key exemptions, definitions of “qualified tuition and related expenses,” and limits on what counts toward reporting, referencing applicable IRS guidance and regulations.

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Appendix D: Providing Tax Forms to Students

IRS Form 1098

IRS Form 1098-E

IRS Form 1098-T

IRS regulations and exemptions

IRS Forms 1042 and 1042-S

Pell Grants and tax-free/ taxable amounts

Appendix D Providing Tax Forms to Students For Title IVparticipating schools, there are two school reporting requirements that involve federal student aid that are not Department of Education requirements. Both of these reporting requirements are Internal Revenue Service (IRS) requirements. The first of these requirements is for your school to provide the 1098 E or T form to certain aid recipients, and the second is to generate a 1042-S for each student who is a nonresident alien and who receives taxable income other than wages. We will discuss each requirement in greater detail below. IRS Form 1098 There are two variations ofIRS form 1098 relevant to awarding Title IV aid: IRS Form 1098-E; and IRS Form 1098-T. IRS Form 1098-E The IRS requires that all schools who receive $600 or more in student loan interest from an individual during a calendar year file an IRS Form 1098-E, Student Loan Interest Statement, and provide a statement or acceptable substitute, either electronically or on paper, to all such individuals. To access the form and for more information on filling out and filing the form, as well as providing statements to borrowers, go to the IRS Form 1098-e website: [https://www.irs.gov/forms-pubs/about-form-1098-e](https://www.irs.gov/forms-pubs/about-form-1098-e). IRS Form 1098-T All Title IVparticipating schools must file a Form 1098-T, Tuition Statement, for each student enrolled for credit for whom a reportable transaction is made, unless: 1. the student is a nonresident alien (unless requested by the student); 2. the student’s qualified tuition and related expenses are entirely waived, or entirely paid with scholarships or grants; 3. the student’s qualified tuition and related expenses are entirely covered by a formal billing arrangement between the school and the student’s employer or a government agency such as the Department of Veterans Affairs or the Department of Defense; or 4. the student’s courses have no associated academic credit applicable toward a degree program at your school associated with them, even if the student is otherwise enrolled in a degree program at your school. The instructions for Form 1098-T do not specify what a school should do if: a student’s qualified tuition and related expenses are entirely covered by a combination of scholarships, grants, and formal billing arrangement between the school and the student’s employer or a government agency; or only a part of a student’s qualified tuition and related expenses are covered by a formal billing arrangement between the school and the student’s employer or a government agency. Note that for purposes of filling out the 1098-T,“qualified tuition and related expenses” do not include the following: amounts paid for any course or other education involving sports, games, or hobbies, unless the course or other education is part of the student’s degree program or is taken to acquire or improve job skills; and charges and fees for housing and food, insurance, medical expenses (including student health fees), transportation, and similar miscellaneous personal, living, or family expenses. IRS Regulations state that: “... a taxpayer cannot claim the education credit for education expenses paid with amounts that are excludable from gross income. Educational expenses paid through a formal billing arrangement between an institution and a government entity such as the Veteran’s Administration, often are excludable from the gross income of the individual student.”(Federal Register, December 19, 2002 (Volume 67, Number 244) page 77680) . We encourage schools to seek guidance from their in-house counsel and the IRS on how to complete IRS Form 1098-T when the student falls into one of the exempt categories listed above. To access the form and more information for students about filling out and filing the form, go to the IRS Form 1098-T website: [https://www.irs.gov/forms-pubs/about-form-1098-t](https://www.

FAQs

What are the two IRS reporting requirements for Title IV participating schools in this appendix?

Schools must provide IRS Form 1098 (using either 1098-E or 1098-T depending on the situation) and generate Form 1042-S for each nonresident alien student receiving taxable income other than wages.

When is IRS Form 1098-E required?

IRS requires schools to file Form 1098-E when they receive $600 or more in student loan interest from an individual during a calendar year, and to provide a statement or acceptable substitute to those individuals.

What are the main exceptions when filing IRS Form 1098-T?

Form 1098-T is not required in specified cases, including when the student is a nonresident alien (unless requested), when qualified tuition and related expenses are fully waived or fully covered by scholarships/grants, when covered by a formal billing arrangement with an employer or government agency, or when courses have no associated academic credit toward a degree program.

How does this appendix distinguish taxable versus tax-free Pell Grant amounts?

Pell Grants and other Title IV need-based grants are tax-free to the extent used for qualified tuition and course-related expenses during the grant period. Amounts used for non-qualifying purposes like housing and food, travel and supplies, miscellaneous personal expenses, or equipment not required for instruction are taxable.

Sep 19, 2026

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