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November 2004 -- school sent tuition bill for spring 2005, due Jan 10, 2005

January 5, 2005 -- payment made for spring (and final) 2005


The school has not sent a 1098-T for 2005 since box 2 is for "amounts billed for qualified tuition and other expenses."

Since the tuition was actually paid in 2005, is this qualified tuition for 2005 and this year's tax return?

TIA ~~ Alison

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The 1098-T is pretty much useless, except make sure the "half-time" box is correct. Then work from your records to determine your qualified expenses, which usually "count" in the year in which they're paid. I see nothing in your facts which would alter this.

Phil
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I see nothing in your facts which would alter this.

Thanks, Phil. That's what I thought, but just wanted to make sure (you know how insecure I am <g>).

The 1098-T is pretty much useless, except make sure the "half-time" box is correct.

The kids was definitely full-time that semester.

Thanks again ~~ Alison
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Phil:

The 1098-T is pretty much useless? I thought that the numbers that were on the form where what you HAD to use? How would you know what numbers to use?

Dusty
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The 1098-T is pretty much useless?

That's been my experience. I believe the IRS actually even issued a waiver saying they didn't have to be, but I wouldn't swear to that.

I thought that the numbers that were on the form where what you HAD to use? How would you know what numbers to use?

Work from your records from the school. Every set I've seen shows what was charged when and how it was paid when.

Phil
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Phil:

Ok... example time.

Tuition - $9,500.
Books - $150
Room and Board - $4,500
Total $14,150

Scholarships $2,500
Grants $1,000
Loans $2,500
Payments $ 8,150
Total Payments $14,150

What would be the amount that would be eligible for the credit?

Dusty
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Do the terms of the scholarships/grants/loans include anything that says "Money can only be used for ..."?
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jrr:

The statement that gives the details from the college does not say "To be used for.." They only say this is the amount that was received.


Dusty
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The statement that gives the details from the college does not say "To be used for.."

But what are the terms of the scholarship, which you would find not in the financial records but in the grant itself. While we're there, what are the terms of the grant?

These questions arise because they're part of determining what, if any, portion is taxable. See Chapter 1 of Pub 970.

Phil
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Tuition - $9,500.
Books - $150
Room and Board - $4,500
Total $14,150


Room and Board is not a qualified expense for the credits. Books are a qualified expense only if the student is required to buy them directly from the school, which I haven't seen yet.

Thus, it looks like we're dealing with $9,500 of qualified expenses.

Scholarships $2,500
Grants $1,000
Loans $2,500
Payments $ 8,150
Total Payments $14,150


You have to reduce qualified expenses by tax-free grants and scholarships. Assuming that all scholarships and grants were tax-free, the adjusted qualified expenses would be $6,000.

Phil
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