TUITION TAX CREDIT

[michaelmars]

client paid tuition for 2010 and 2011 both in 2010. the 1098-t reflects this. the total amount is way over any limitations. Can i take the 2011 tuition on this years return? Seems like the client gets screwed by paying the tuition for 2011 early in December 2010.

[jainen]

>>the client gets screwed by paying the tuition for 2011 early in December 2010.<<

Presumably she had a particular non-tax reason for the advance payment, like maybe the school required it or she had to get it out of the account before the end of the year or something. That always trumps tax effects, in my opinion.

[michaelmars]

Nope, just someone who hates to owe money and pays bills when received. [except mine of course, i get paid out]

[jainen]

>>Nope, just someone who hates to owe money and pays bills when received<<

How can you say "nope" and then immediately give a perfectly good non-tax reason?

[Cathy]

Michael,

Did you check with your client to make sure that the tuition was actually paid in 2010? If the box is checked on the 1098-T, it means that the figure listed for tuition, etc... (part of it anyway) was billed (not necessarily paid) for the spring semester of the following year. I never go by the figures on the 1098-T....always get with the student for actual tuition, etc.. paid for the year in question.

[michaelmars]

and the government doesn't match the 1098? i thought they were based on when paid like a mortgage 1098, and not based on due dates or applicable dates etc.

[mcb39]

I think what Cathy is saying is that there is a checkbox in box 7 on the 1098T for amounts that were paid for an academic perion beginning in the current year. I have seen this in the past. Monies were paid in December for a full year of tuition in the following academic year. They are then used for credits in the year the student was actually in college.

[michaelmars]

that box wasn't checked but i guess substance over form applies. -Thanks

[SCL]

if student didn't pay any tuition in 2011, then yes they are screwed for any 2011 tax credit.

the moral of the story, like many tax stories...poor tax planning.