Can they do this? (Stressing about Tax Credit/1098)

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Can they do this? (Stressing about Tax Credit/1098)

Postby drquinley » Wed Jan 30, 2013 7:50 pm

I'm going to try to break this down. I hope it makes sense.

I received my 1098 form today. I've really been looking forward to being able to benefit from the American Opportunity Tax Credit, and I would (have) been able to this year, since I'm at a university now and my expenses outweigh my tax-free grants for a change. The problem, however, is that my 1098 shows me having $5500 for my Pell grant and only $2900 for tuition and qualified expenses. How could this be when that's about what a year's worth of tuition costs? I'll explain that, and maybe someone here can make heads or tails of it, and perhaps tell me if I have a recourse.

In reality, my 1098 is reflecting two things: 1) My tax-free Pell Grant for both spring and fall semesters in 2012; and my loans for both semesters. 2) My tuition and fees for ONLY fall 2012.

I called my school realizing they'd made a mistake and left off my tuition and fees from last spring semester. They said they did not, but rather the tuition from last spring (classes began mid January 2012) went on my 2011 tax forms. I never received a 1098 for 2011. As well, 2012 was my first year attending. My school said that I was a pre-registered student, and that I was billed for tuition in late 2011, just before classes began. This seems right, but I had financial aid and financial aid was applied in spring 2012. They told me it's a matter of billing, not a matter of when it's paid; that it's a matter of billing, not a matter of when classes begin.

Even if I received the 2011 1098 (which I didn't; I'd never seen one until just recently), I couldn't have used it with my fees from my community college during 2011 because I had so much grant money compared to tuition, and had no tax liability otherwise. But when I asked my school "well then, why isn't this spring 2013 on my 2012 1098 form?" They said it's not supposed to be and went into a very confusing explanation about this and that. I tried to follow it.

So I guess part of what I'd like to know is that IF I can get my 1098 from 2011, the same 1098 that shows my tuition and fees for the Spring semester of 2012, can I use it for this tax year, or am I screwed? How does this happen?! The whole thing is going to cause me to lose $1000 on my return this year. That's a significant chunk of change that I'd been counting on, and even paid for summer classes out-of-pocket at a community college, knowing it would lump in to my overall expenses and ultimately help me get a return back. I couldn't have seen this coming.

My school is sending me my billing from 2011 (the bill for Spring 2012), but said because of the software change to a new system, they cannot access my old 1098. I'm hoping someone there can, in case there's something I can do.

Is anyone familiar with this? I know this borderlines on tax questions, but I appreciate anyone's experientially-based and non-binding opinion.

~Aaron
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Re: Can they do this? (Stressing about Tax Credit/1098)

Postby steve.blank » Sat Feb 16, 2013 9:41 am

See if this helps. You should read the instructions for form 8863 available on the IRS website.

According to the IRS instructions for the educational tax credits, qualified tuition and fees actually paid in 2012 can be used for the credit. That includes any payments made in 2012 for the first semester of 2013.

Schools have the option of reporting on the 1098-T what you paid, or what they billed (their choice) - but if your records show that what you actually paid in 2012 differs, you may use your own figures. Just keep your records in case the IRS should ever question the difference between yours and the schools numbers.

This is a quote from the IRS instructions for form 8863 on which you take the credits:
"Qualified education expenses paid in 2012 for an academic period that begins in the first 3 months of 2013 can be used in figuring an education credit for 2012 only. See Academic period, earlier. For example, if you pay $2,000 in December 2012 for qualified tuition for the 2013 winter quarter that begins in January
2013, you can use that $2,000 in figuring an education credit for 2012 only (if you meet all the other requirements).
You cannot use any amount you paid in 2011 or 2013 to figure the qualified education expenses you use to figure your 2012 education credit(s)."
Steven Blank
College Financial Aid Consultants
29 Ives Hill Court
Cheshire, CT 06410
203-250-7761
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