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Hi Everyone,

I graduated in May 2015. I paid tuition in September 2014 for the final year of my school, which includes one semester in 2014 (the fall semester) and one semester in 2015 (the spring semester). Since the tuition was paid in 2014, I only received a 1098-T in 2014 from my school and I did not receive a 1098-T in 2015. I did not file for tax return in 2014 because I did not have any income. My parents did not claim any education expense on me because their income is too high. But they did claim me as their dependent on their tax return in 2014. I started working July 2015. Therefore I am preparing my tax return for 2015. Can I claim the tuition I paid in 2014 for the 2015 semester as educational expense in my 2015 return to get the education credit?

Thank you very much.

Tom
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Hi Tom,

Congratulations on your graduation and job. Both are important milestones.

Here are a couple of resources in which I think you'll find the answer to your question.

https://www.irs.gov/publications/p970/ch06.html

https://www.irs.gov/uac/Tax-Benefits-for-Education:-Informat...

Good luck on your new journey,
Bob

P.S. I found both by entering "education deductions" in a Google search box.
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Can I claim the tuition I paid in 2014 for the 2015 semester as educational expense in my 2015 return to get the education credit?

No. Look at the instructions for Form 8917 https://www.irs.gov/pub/irs-pdf/f8917.pdf (my bolding):

Generally, in order to claim the deduction for education expenses for a dependent, you must have paid the expenses in 2015 and must claim an exemption for the student as a dependent on your 2015 tax return (line 6c of Form 1040 or 1040A). For additional information, see chapter 6 of Pub. 970.

and

CAUTION You cannot use any amount you paid in 2014 or 2016 to figure the qualified education expenses you use to figure your 2015 tuition and fees deduction.

AJ
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Thanks Bob and AJ for your responses. I sincerely appreciate!

I read the publications and the instruction for Form 8917 as you guys suggested. I found the paragraph that AJ quoted. Though it is still kind of unclear to me. It might just mean you cannot use what you paid in 2014 for academic period that started in 2014.

To further clarify, I paid the tuition twice in 2014, once in the summer for the fall semester 2014 and once in the winter for the spring semester in 2015. Since I paid using a loan, so I processed the loan earlier. I am pretty sure the deadline is a few days before the semester started in January 2015. I could have paid in 2015. Though I paid earlier, the expense is really for the spring semester 2015. Why can’t I claim it as education expense for my 2015 tax?

I think this situation should be pretty common for anyone who graduated in the tax year and got a job for the first time. I will sincerely appreciate if anyone can share their experience.


Regards,

Tom
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If you paid via a loan, the key date is the date(s) the loan was disbursed to the school, not the date your loan application was approved.

Ira
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I found the paragraph that AJ quoted. Though it is still kind of unclear to me.

Are you sure you graduated from college? I don't know how much clearer the below sentence can be.

CAUTION You cannot use any amount you paid in 2014 or 2016 to figure the qualified education expenses you use to figure your 2015 tuition and fees deduction.

The only possible question could be the definition of "paid". For virtually every tax oriented item, "paid" includes paying by incurring some kind of debt. So the date a credit card is charged is the date of payment. And, for your purposes, the date a loan is funded - the date borrowed money is given to the school - is the date the tuition is paid.

There's nothing unclear in the tax law here. The only thing unclear is the date you paid the tuition by incurring the loan.

I think this situation should be pretty common for anyone who graduated in the tax year and got a job for the first time.

It's exceedingly common. But the result is not what you want it to be.

--Peter
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To further clarify, I paid the tuition twice in 2014, once in the summer for the fall semester 2014 and once in the winter for the spring semester in 2015. Since I paid using a loan, so I processed the loan earlier. I am pretty sure the deadline is a few days before the semester started in January 2015. I could have paid in 2015.

Let me fix that for you.....

To further clarify, I paid tuition in 2014 that I could have paid in 2015.

'paid tuition in 2014' is the only thing that matters. If you had chosen to pay the tuition in 2015, you would have been able to take the deduction.

Though I paid earlier, the expense is really for the spring semester 2015. Why can’t I claim it as education expense for my 2015 tax?

Because the law says that payments must occur in the tax year that they are being deducted for.

I think this situation should be pretty common for anyone who graduated in the tax year and got a job for the first time.

Yes, it is. However, it takes planning ahead to take advantage of it, if the graduate even has the option to pay in the year that they graduate. (Some schools require payment for the spring term in December, so spring graduates from those schools don't even have that as on option.)

Sorry, you can chalk this up as a life lesson that, as with most things having to do with taxes, you need to understand the details of what the law requires.

AJ
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Thanks Ira for the great suggestion. I checked as you suggested. It was paid to the school in December 2014. It seems it was a few days too earlier for me.

Thank you very much again.

Regards,

Tom
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Thanks Peter and AJ for the detailed responses. You guys are really great. I sincerely appreciate. Peter, to answer your question, I am really not sure myself I even graduated from college when I was reading these publications. I plan to be a lifetime learner though, as I am one here.

I understand your points now. I will chalk it up as a life lesson. I certainly did not think about tax in December 2014. Though I went back and read those paragraphs again. The following paragraph still puzzles me quite a bit.

“The tuition and fees deduction is based on qualified education expenses you pay for yourself, your spouse, or a dependent for whom you claim an exemption on your tax return. Generally, the deduction is allowed for qualified education expenses paid in 2015 in connection with enrollment at an institution of higher education during 2015 or for an academic period beginning in 2015 or in the first 3 months of 2016.”

Now I have a question, if someone paid tuition in December 2014 for an academic period that started on April 2, 2015, does it mearn that he neither can claim it in 2014 nor in in 2015?

Thank you all again for your help!

Regards,

Tom
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Now I have a question, if someone paid tuition in December 2014 for an academic period that started on April 2, 2015, does it mearn that he neither can claim it in 2014 nor in in 2015?

Correct. The academic term starts in the 4th month of 2015, so if the tuition was paid in 2014, it wouldn't count for either 2014 or 2015. That said, I doubt there are many academic terms starting in or after April that require payment on or before December 31 of the prior year. So the chances of being forced into this situation are probably fairly small.

AJ
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Thanks AJ. I agree it might only happen infrequently. But it does not seem fair to me. How can the law be written like this?

Regards,

Tom
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But it does not seem fair to me.

Fair? 2 words that rarely describe tax laws:
1) fair
2) logic

How can the law be written like this?

1) See above
2) ask your elected representatives

AJ
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Foralpha: "Thanks AJ. I agree it might only happen infrequently. But it does not seem fair to me. How can the law be written like this?"

It is largely the result of most individuals being "cash-basis" taxpayers (and not accrual taxpayers).

And the tax code is not always fair, but it is the law. I do not believe it unreasonable for the Congress to require that in order to be deductible, expenses for education be incurred in the same year that one receives the educational benefits.

While not exactly the same, see this TMF article about
doubling up on deductible expenses and hwy it works for cash-basis taxpayers.
http://www.fool.com/personal-finance/taxes/2006/11/28/double...

Try telling the IRS that you paid your 2015 ad valorem taxes in January 2016, but you still want to deduct them when you calculate your 2015 income taxes because they were for calendar year 2015.

Regards, JAFO
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