If I pay for school in december (for the next semester) what year do I claim the expenses on my taxes?

[Massen15]

Sorry I feel I am beating a dead horse here BUT, I feel my situation is slightly more unique though i fear the answer is the same. 

Basically like most here I paid for most of my spring 2020 semester in December 2019, this tax return I was applying for the Lifetime Learning Credit but did not qualify because the amount in box 1 is about 5000, and my scholarship is 7500. So to them it seems I had extra income when in reality my tuition I PAID was about 15000 total and the scholarship was on top of that. 

Any suggestions on what I can try and do? Seems like Im getting shorted to me.

[AmyC]

The scholarship can be allocated to room and board. This gives you some taxable income but also allows the credit which far exceeds the tax. I recommend you look at another of my answers for help.

@Massen15

[Massen15]

@AmyC 

So if I understand correctly, it seems I would allocate some of that scholarship money into my income, and then when asked of scholarships use the remainder of the scholarship there in box 5? And that will allow me to get the life time learning credit?

I just want to be clear about it sorry if these questions are monotonous. I appreciate your help!!

[Massen15]

Follow up question that seems obvious but I want to make sure I have no problem with my taxes, if I claim some of my scholarship as income for room and board, would that change the amount I put for box 5? Thank you!

[ReneeM7122]

Box 5 of the 1098-T shows the amount of scholarships and grants that were paid directly to the school for the student's expenses. Scholarships and grants may reduce the amount of qualified expenses the student can use when calculating a credit, but you should not change the amount that appears on your 1098-T.  The information must match because the school furnishes the same data to the IRS.

Here is a TurboTax article with more information about form 1098-T.

@Massen15

[yw2]

Like most students here I paid about $27000 for my spring 2020 semester tuition in December 2019, therefore my 2020 1098-T Box 1 only shows about $3000 tuition expense, Box 5 shows about $5000 scholarship grants. In 2019, I was claimed as dependent on my parents'  tax return, and they could not take any education credit because of income limit.

I graduated in 2020 summer. Now when I am filing my own 2020 tax return as independent, am I disqualified for claiming any education credit because my 2020 1098-T Box 1 is less than Box 5? Is there any remedy solution for this situation? I also took out 529 plan distributions to pay for my education expenses, do I have to pay tax on 529 earnings?

[MarilynG1]

@yw2 When entering your 1098-T, under the entry for Tuition, you can indicate 'this is not what I paid to the school' and enter the amount you actually paid, since your parents did not get an Education Credit for you in 2019 using that amount. 

The IRS is aware that 1098-T's are not always correct, and this issue of crossover of payments exists. Keep records of what you paid for 2020 tuition.

Click this link for instructions on How to Enter a 1098-T. 

Your 529 distribution is not taxable if all funds were used for Education Expenses (including Room and Board).  If this is the case, you don't need to enter your 1099-Q into your return at all.  Just keep it for your records. 

Click this link for more info on Form 1099-Q.

[speshlakai1]

I might have messed up. I bought a computer for online classes in Spring 2020 on December 8, 2019. Should this have been reported in my Tax 2020 or Tax 2019? I am wondering if I need to amend my Tax 2019. I had no 1099-T for 2019 because I have not started school that semester until January 2020. Could you help?

[ReneeM7122]

While the computer generally needs to be deducted in the year in which it was purchased, but since you were not in school until 2020 and did not use the computer until then, you can claim in in 2020.  

@speshlakai1

[Anonymous]

Hello,

If I was billed for attending a fall semester in 2020, but did not pay the bill for that fall 2020 semester until January of 2021 (due to late reimbursement process from my company), can I still claim an AOTC credit for 2020 taxes even though I paid them technically in 2021, or do I need to wait for the next year to claim the credit when I file my 2021 taxes? 

Thanks!

[ReneeM7122]

It depends.  To be eligible to claim the AOTC or the lifetime learning credit (LLC), the law requires a taxpayer (or a dependent) to have received Form 1098-T, Tuition Statement, from an eligible educational institution, whether domestic or foreign. Generally, students receive a Form 1098-T Tuition Statement, from their school by January 31. This statement helps you figure your credit. The form will have an amount in box 1 to show the amounts received during the year. If your 1098-T has the necessary information in 2020, you can claim the credit.  If not, then you'll need to wait until the following year.

@Anonymous

[sayanything29]

So my daughter bought all her supplies in December. Started RN program in January. How do you answer question about being a full time student in 2020? If she didn’t start till January but you said you can claim stuff if she started first three months of 2021?

[sayanything29]

This is the answer I found!!!

ANSWER YES.

If you paid for classes in 2020 that started in 2021 (and I assume you did or you wouldn't be asking this) answer Yes, that you were a student in 2020.

Additionally, the 1098-T might report that you were less than half-time if you didn't attend in 2020, but that is not true for taxes. 

According to the IRS:

“For 2020, treat an academic period beginning in the first 3 months of 2021 as if it began in 2020 if qualified education expenses for the student were paid in 2020 for that academic period.”

So Yes, you were a student in 2020 and yes "at least half time" 

[sayanything29]

This is what you found!

ANSWER YES.

If you paid for classes in 2020 that started in 2021 (and I assume you did or you wouldn't be asking this) answer Yes, that you were a student in 2020.

Additionally, the 1098-T might report that you were less than half-time if you didn't attend in 2020, but that is not true for taxes. 

According to the IRS:

“For 2020, treat an academic period beginning in the first 3 months of 2021 as if it began in 2020 if qualified education expenses for the student were paid in 2020 for that academic period.”

So Yes, you were a student in 2020 and yes "at least half time" 

[norhanag]

Hi,

I am trying to figure out how I can avoid including my scholarships and grants as taxable income. For my 2020 1098-T, I have $85 of tuition fees because my school "billed" me in December 2019 for a majority of my Spring 2020 tuition and included it on my 2019 1098-T. My scholarships were applied in my Spring 2020 semester against that tuition, so I technically did not pay or have any scholarships as taxable income. When doing my taxes right now, it is counting all $20k of scholarships and grants as taxable income because I did not have tuition expenses that covered them on the 1098-T. Can I use the edit option to put the tuition billed in December 2019 to prevent my scholarships being counted as taxable income even though my 1098-T only says $85?