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Hi guys- I posted this in the financial aid section but didn't get any traction because it only applies to 3Ls...


Hi,
I am 3L looking to save on taxes for 2014.

I have enjoyed getting the $2,000 Lifetime Learning Tax Credit each year for paying insane amounts of tuition.

But for my 3L year, the tuition for the spring semester was due and my student loan was applied in late December of 2013. This means that I will not get a 1098-T from my school for 2014.

Since I (like all of you with federal loans) am able to make a "refund payment" within 120 days of disbursement which will cancel all interest and fees, and basically undo the loan, I am wondering if this would count as "paying tuition" in 2014.

Or does this count as just paying off a loan (and thus ineligible for the tax credit)?

Oh and fyi, the refund payment would go to my school and not my loan servicer.

I suppose a case could be made either way, but I am curious as to what other people think.

Thanks!

if you have the money to pay this semester's tuition in cash why are you taking out loans?

and no i don't think this will work. read the irs website - the relevant date for qualified education expenses is the date they're charged to you. i.e. if your school billed you in december for spring 2014 tuition and you didn't pay until january the expense still counts as a 2013 expense.

I don't think that's correct. The IRS website says:

"You cannot use any amount you paid in 2012 or 2014 to figure the qualified education expenses you use to figure your 2013 education credit(s)."

and my 1098-T says:

"The credits are allowable only for amounts actually paid during the year and not amounts reported as billed, but not paid, during the year."


Also- I decided to take out a loan for this semester because I wasn't sure if I would need my savings for something else (emergencies, apartment deposit, moving expenses, retirement contributions, etc.)

The ability to make a refund payment essentially gives you 120 (interest free) extra days to pay tuition.

then i dunno, you've exhausted my tax knowledge.