Mihir wrote:
- quote -

Yes, as long as it was for a term that began in 2004 or the
first quarter (I think) of 2005.

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Sassy Baskets,

Thank you very much.

I went through several IRS publications in last two days and
I think all I found was the word "PAY". So, as you have
mentioned I should count qualified educational expense based
on what I have actually paid. and in that case I should
include $10K in 2004 tax return which was billed in dec.
2003 but was paid in jan 2004.

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Mihir wrote:

- quote -

I am skeptical that the university based anything on a
1098-T on anything to do with loans--how much was approved
or disbursed. The boxes for tuition on that form should
reflect tuition actually paid or billed, regardless of how
it was paid, and should ignore loans altogether. Anyway,
ignore the 1098s. Go by your own records: how much did you
actually PAY, either with loans or your own money, for
tuition during each year?

For 2003, if correcting the tuition paid will not affect how
much lifetime learning credit you get, I can't think of a
reason to amend. Just make sure you have documentation of
the tuition that was actually paid and when it was paid, and
if it is every questioned it will be easy to explain. For
2004, claim the amount you actually paid in tuition during
2004 for a term that began in 2004 or the first 3 months (I
think) of 2005. Treat tuition paid for with loans the same
as tuition paid for out-of-pocket.

Now, keep in mind that if you or your loans actually paid
for some of your 2004 tuition in 2003, that counts in 2003,
not 2004. If you are not sure when the loans were paid to
the university, contact the school or the lender or both.

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I am in kind of weird situation right now.

My wife was a full-time student last year and graduated in
Aug-04. She was getting semester to semester CitiAssist loan
for tuition expanse until summer 2003. In Fall-03, her loan
administrator told her to apply for CitiAssist loan for
estimated amount for rest of education. She convinced her
that that would be best thing to do as there will be no
paperwork in the next semester.

Due to this approval, even though she has not used all those
loan money (it was not approved but not paid to college) on
tuition in 2003, university reported whole loan amount as an
educational expense on the 1098-T. We didn't notice that at
that time and finish 2003 tax return with reported education
expense of ~$33,000.

Now, even though $10,000 of this loan amount was actually
being used in spring 2004, on the 1099-T of 2004, university
has reported only $3,255. (paid in cash in addition to loan
amount). So, we are not eligible for almost $1400 of tax
credit in life-time learning credit.

Now, is there a way, I can fix this.

1. What is really eligible educational expense? Is it based
on what loan you get approved or is it what you really pay
for courses?

2. If later is true, should I amend 2003 tax return for
corrected educational expense? Although, it will not affect
my tax liability as even after that I will get full $2,000
for life time learning credit.

3. Can I just claim $13,255 ($10,000 from previous year +
$3,255 reported on this year's 1099-T) on 2004's tax return?
Will it be a problem?

Please advice. If there is any authority that I can contact,
please let me know. Thank a million.

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