Can I claim 2017 tuition reported on the 2016 1098-T?

[ashredder94]

Details:

• My mom claimed my 1098-T beginning in 2013, 2014, and 2016, so I should have one more year to claim the American Opportunity credit.
• 2016 1098-T contains tuition billed in 2017, as box 7 is checked. She claimed the AOTC in 2016 on my tuition.
• My school billed the Spring 2017 semester in December 2016, which is why it's reporting this way. My student loans applied when I was billed.
• I paid cash for what my loans and scholarships did not cover. I'd like to be able to use the full $5,000 of tuition paid (which includes student loans applied for my Spring 2017 tuition in December of 2016).
• Claiming the credit will drastically change my tax situation, so I want to avoid getting stuck with a penalty.

Thank you!

[ashredder94]

She claimed my 2016 1098-T, but she didn't have to claim the full amount to get the credit. I had $10,000 in tuition expense on the 2016 1098-T, but $5M of that was for my 2017 semester. If I use that $5M for 2017, I'll get the full benefit of the credit. Her 2016 form 8863 only claims the max amount of $4,000.

[CarolC · Accepted solution]

You need to deduct the tuition in the year it was paid - including a spring semester paid in December of the prior year.

If a portion of the tuition was not paid, because the 1098-T is reporting the tuition in Box 2 as billed, you need to confirm that your mother did not include your 2017 tuition expenses, which were reported on the 2016 Form 1098-T, on her 2016 tax return.  If she did, then you cannot claim the same tuition expenses for 2017.

You can deduct other qualified expenses you may have paid in 2017 for the American Opportunity Credit.  You can include the cost of books, supplies and equipment you purchased that relate to the program of study when you calculate the AOC credit.

Click this TurboTax FAQ What are Examples of Education Expenses for more information.

[Edited 4.15.18 | 10:05 PM]

[ashredder94]

@TurboTaxCaro  She claimed my 2016 1098-T, but she didn't have to claim the full amount to get the credit. I had $10,000 in tuition expense on the 2016 1098-T, but $5M of that was for my 2017 semester. If I use that $5M for 2017, I'll get the full benefit of the credit. Her 2016 form 8863 only claims the max amount of $4,000.

[ashredder94]

@TurboTaxCaro Additionally, due to the 2016 1098-T reporting most of my Spring 2017 tuition, it's showing that my minimal 2017 1098-T tuition of $500 is being exceeded by the $825 scholarship I received. For Spring 2017, I had $5,000 in tuition expense, $3750 student loans, and $825 scholarships. Obviously this being applied to 2016 would screw me, because it's saying my scholarship exceeds my tuition which would cause ADDITIONAL taxable income.

[CarolC]

@ashredder94 You are correct.  Since the maximum education expenses claimed in 2016 was $4,000, then you can claim the $5,000 paid for your 2017 tuition on your 2017 tax return.  Your total tuition for 2017 = $5,500.  This amount will be reduced by the $825 scholarship received.  For the AOC, books, fees, and supplies are also qualifying education expenses.

[CarolC]

@ashredder94 Please see updated post.  The rule for claiming the prior year 2016 1098-T education expenses are specific.  You may be able to deduct the amount if the 2016 1098-T reported the tuition expense in Box 2 (billed) and the tuition wasn’t paid until the 2017 tax year.  If however, all the tuition was reported in Box 1 (as paid), you can only deduct payments in the tax year paid (2016).