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Old 03-13-2013, 06:30 PM
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Question Education credits

For anyone well-versed in Education credits....

Question regarding the coordination of a parent taking the American Opportunity Credit and a college student figuring the taxable portion of distributions from a QTP (Qualifying Tuition Plan).

After a lot of study I think I understand how to take the Credit, but I'm not sure what number my daughter should use for "qualifying educational expenses" since we don't have precise records of every cent she spent going to school.

Would the number in Box 2 of Form 1098T be a good number to use? I.e., is everything they report on that form going to count as "qualifying"? Of course I know I must reduce the amount by the $4000 I claim to take the AOC.



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Old 03-14-2013, 12:39 PM
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“Would the number in Box 2 of Form 1098T be a good number to use? I.e., is everything they report on that form going to count as "qualifying"? Of course I know I must reduce the amount by the $4000 I claim to take the AOC.””=== The IRS instructs institutions to report either payments received Box 1 or amounts billed for qualified tuition and related expenses Box 2 on the 1098-T.However, the amount box 2 of Form 1098-T might be different than what you actually paid. Some schools reports in box 2.Basically, you who can claim her as a dependent, may be able to claim an education credit on Form 1040 or 1040A, only for the qualified tuition and related expenses that were actually paid in 2012. Her school may report either payments received during the calendar year in box 1 or amounts billed during the calendar year in box 2. The amount shown in box 1 or 2 may represent an amount other than the amount actually paid in 2013.Box 2 of 1098T shows the total amounts billed in 2012 for qualified tuition and related expenses less any reductions in charges made during 2012 that relate to those amounts billed during 2012. Since education tax credits are based on "payments received for qualified tuition," School reports "qualified tuition" in Box 1 as a service to their students. The school enters the total amount of payments received for qualified tuition and related expenses from all sources during the calendar year ,2012 in Box 1. 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. ALSO;this may NOT be your case. If they left Box 1 blank and you claim it on your tax return, the IRS will not accept it. One reason this happens is that some people pay Spring semester's tuition (Jan - May) in December of the previous year. if they included the amount for Spring 2012 in 2011's amount. In that case, you still cannot claim it, as it would have already showed up on your 2011 tax return .The University sends your 1098-T information to the IRS.


Last edited by Wnhough : 03-14-2013 at 12:43 PM.


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Old 03-14-2013, 05:05 PM
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Thanks for your reply.

The 1098T left Box 1 blank. Box 2 is what the school "billed" in 2012.

We printed out the "details" of the 1098T expenses (from the school) and it separates the expenses between the tax years, and reports what is billed in each year.

The 2011 1098T reports the bill for Fall 2011 and for Spring 2012 and the 2012 1098T reports the bill for Fall 2012 and for Spring 2013.


However, my daughter's fees are paid by a QTP (Texas Guaranteed Tuition Plan) which reported the distributions for Spring 2012 as being paid in 2012. I called them and they said that the school may say that the bill is paid in December, but that it is actually just a credit on the fee statement, and that the money does not actually get sent until 2012. So even though the 2012 1098T does not show it, that money was actually paid in 2012.


Every tax software I have used asks if she got a 1098T in 2011, and asks if box 7 ("does this include expenses for 2012?") is checked.

The 2011 1098T "details" page does show the amount for Spring 2012...and it even has it separated out as "for a future tax year". It seems to me that they must be asking this for just this situation. Why else would it matter in 2012?



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Old 03-14-2013, 08:48 PM
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“However, my daughter's fees are paid by a QTP (Texas Guaranteed Tuition Plan) which reported the distributions for Spring 2012 as being paid in 2012. I called them and they said that the school may say that the bill is paid in December, but that it is actually just a credit on the fee statement, and that the money does not actually get sent until 2012. So even though the 2012 1098T does not show it, that money was actually paid in 2012. “====Tuition that you paid directly through a loan or personal cash payment is eligible for tax deduction. You may not claim a deduction on any portion of tuition or eligible expenses paid with tax-free educational assistance like a grant or scholarship. According to the IRS, you can claim the expenses in the year they are paid NOT are billed; you will take the credit or deduction for the tuition and fees in the year they were paid.


“Every tax software I have used asks if she got a 1098T in 2011, and asks if box 7 ("does this include expenses for 2012?") is checked.”==== I am not familiar with a tax software; yu may get some professional advice from a software TT or H&R Block or etc vendor.

The 2011 1098T "details" page does show the amount for Spring 2012...and it even has it separated out as "for a future tax year". It seems to me that they must be asking this for just this situation. Why else would it matter in 2012?”========== When reviewing your records , I guess you need to take into consideration actual billing dates in order to reconcile your records to the amounts on the form. The Form 1098-T reflects billing and refunds made in the calendar year. Amounts billed in previous or future years are not included. For instance, if a student paid for Spring 2012 prior to January 1st, 2012, the amount billed for the Spring 2012 semester tuition and fees would be included in Box 2 of the prior year 2011 Form 1098-T; the credits are figured on amounts PAID not billed. The educational institutions have 2 ways of reporting the expenses - what was paid or what was billed. It is your responsibility to keep your records of what you paid, and you should only take credit for your actual expenses.



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Old 03-15-2013, 10:26 AM
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Tuition that you paid directly through a loan or personal cash payment is eligible for tax deduction. You may not claim a deduction on any portion of tuition or eligible expenses paid with tax-free educational assistance like a grant or scholarship.


Payments from a QTP DO qualify the owner (me) for a tax credit if the beneficiary (my daughter) is my dependent. The QTP is pretty specific about what they will and will not pay for. Almost everything it pays for qualifies as an educational expense as far as tax credits go, so it's a pretty good guideline for calculating expenses.


According to the IRS,you can claim the expenses in the year they are paid NOT are billed; you will take the credit or deduction for the tuition and fees in the year they were paid.


Yes, that's exactly my point. The QTP PAID the bill in 2012, even though the school says they BILLED it in 2011, so it doesn't show up in the 2012 1098T. The 2012 payments are actually split between the 2011 1098T and the 2012 1098T, making it a bit confusing, and in our case, making it LOOK like she spent less than she received, when she really didn't.


 The educational institutions have 2 ways of reporting the expenses - what was paid or what was billed. It is your responsibility to keep your records of what you paid, and you should only take credit for your actual expenses.


Exactly. The school provided me with the details of what was BILLED, and I split them into what was PAID in 2012 and what wasn't. Then I claimed only what was PAID in 2012. Some of that was on the 2011 1098T... that was my point when I made the comment about why they ask if you have a 2011 1098T with Box 7 checked... (BTW they ask this on Form 8863, which I must file for the American Opportunity Credit.)

So I'm hoping the IRS knows that this situation comes up and they will understand what I did.



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Old 03-15-2013, 11:08 AM
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Payments from a QTP DO qualify the owner (me) for a tax credit if the beneficiary (my daughter) is my dependent. The QTP is pretty specific about what they will and will not pay for. Almost everything it pays for qualifies as an educational expense as far as tax credits go, so it's a pretty good guideline for calculating expenses.
"===================OK I got you ;thanks



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