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SEHale
New Member

Son graduated in May 2017. 2016 1098T had Box 7 checked for January-March 2017. We are not getting a 2017 1098T. Did I already get the 2017 credit on 2016 taxes?

Should I get a copy of his final bill showing transactions for 2017 and enter them manually?

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5 Replies
Carl
Level 15

Son graduated in May 2017. 2016 1098T had Box 7 checked for January-March 2017. We are not getting a 2017 1098T. Did I already get the 2017 credit on 2016 taxes?

Most likely you will not receive a statement of any kind. Qualified education expenses are claimed/deducted in the tax year they are paid, and it does not matter what year is paid *for*. Just like scholarships and grants are claimed as taxable income (initially) in the tax year they are received, regardless of what tax year that scholarship or grant may be *for*. So if he graduated in 2017, it's highly likely you paid no qualified education expenses in 2017, as they were all more than likely paid in 2016 prior to the start of the 2017 fall semester in Jan 2017.

Remember, the IRS works in calendar years, while colleges work in academic years. So the reality is, it takes you 5 calendar years to get that 4 year degree. So for example, if you take the AOC for the first four calendar years, you won't qualify for that credit again in the 5th calendar year when they graduate.

If no money is owed to the college, you will not get a bill or anything. However, the student should still be able to log in to their online college account and access the financials under the login. If/when they do that, pay attention to details giving special consideration to the dates.

What matters is the date a payment or credit was applied. It *does not matter* the start date of the class that payment was applied to. So a payment applied on Dec 15 of 2016 for a class that started in Jan of 2017, is reported on the 2016 tax return, and not the 2017 tax return.

If scholarships/grants awarded in 2016 exceeded the qualified expenses they were applied to in 2016, *AND* the school did not refund the difference to the student, then you would tell the 2017 program that the first thing applied to 2017 expenses was that scholarship money "carried over" from 2016. Then continue on from there.

gselvo
New Member

Son graduated in May 2017. 2016 1098T had Box 7 checked for January-March 2017. We are not getting a 2017 1098T. Did I already get the 2017 credit on 2016 taxes?

This is very useful but still leaves unanswered questions for me:  Student account activity shows positive entry for financial aid items on one date and a corresponding negative entry for another slightly later date.  The term "applied" is used in the foregoing answer.  Is that the negative entry date, or the positive entry date?  In my case the aid was for the 2019 academic year not a prior year so I take it that 2018 1098-T number will be reduced for the current 2018 tax year and the reduction will be accounted for by an addition in the 2019 tax return?
Carl
Level 15

Son graduated in May 2017. 2016 1098T had Box 7 checked for January-March 2017. We are not getting a 2017 1098T. Did I already get the 2017 credit on 2016 taxes?

You'll have to talk to the college BUSAR to see how they annotate things in their system. Not all educational institutions do things the same way.
Basically, when a school credits a payment just doesn't matter, as you should have a receipt of some sort to show when you paid it to the college. A cancelled check will do just fine, as not only is the check dated for when you wrote it, but the date of deposit will be stamped on the back of it. You go by when you paid it. Not when the college credited it.
Then is one reason why I recommend for all seniors, that all qualified expenses be paid before the end of the first senior semester. Accurate and detailed book keeping on this stuff is an absolute must.
gselvo
New Member

Son graduated in May 2017. 2016 1098T had Box 7 checked for January-March 2017. We are not getting a 2017 1098T. Did I already get the 2017 credit on 2016 taxes?

Thanks for the comment but my question does not concern something I paid for with a check or otherwise.  I am referring to scholarship funds.  My thinking is that these scholarship funds are "applied" when the school makes deductions for school charges from previously credited (a short time earlier) scholarship amounts in the students account.  The 1098-T involved has box 7 checked, which reads "includes amounts for an academic period beginning January - March 2019,"  i.e., a period after the 2018 tax year.  The school operates on the quarter system.  So my assumption is that I will deduct all of these amounts debited in 2019 because they were not "income" to the student in 2018, though they will be in 2019, though some will be tax exempt.
Carl
Level 15

Son graduated in May 2017. 2016 1098T had Box 7 checked for January-March 2017. We are not getting a 2017 1098T. Did I already get the 2017 credit on 2016 taxes?

What I'm not sure of is if the TurboTax program will "carry over" for you, that excess to your 2019 tax return. But I would expect the program to do that. But basically, if you selected the box for the "academic period beginning Jan Mar 2019" and entered the total amount of excess when asked for the amount, then you don't have any "excess" unused scholarship money to be taxed.
Now if the student received a check from the school for the excess, then the amount of that check is taxable income "to the student". You have to subtract the amount of that check from the carry over amount.
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