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Question regarding Taxes and Stafford Loans

post #1 of 20
Thread Starter 
I started doing my taxes using Turbo Tax and I ran into something I'm not sure about. This question is mainly for people who have/had to file a 1098-T (Tuition Statement). I entered the correct information from my 1098-T into Turbo Tax and clicked to continue. The next page asked how much of the tuition amount was actually paid to the school. Since I'm using Stafford Loans and not paying out of pocket would the amount I was billed for tuition and related expenses be the same as how much was actually paid to the school?

As an example (not the actual amount) say I was billed $2200 for tuition and related expenses (Box 2 of the 1098-T). Would the amount that was actually paid to school also be $2200 since the tuition was paid by my student loan?

I want to contact the financial aid office at school and ask them on Monday. This is the last thing I need to do so I can file my taxes.

Thanks for any help. Feel free to PM with any information if you would rather do it that way.
post #2 of 20
I don't think you can take the money that was taken out of the Stafford loan off your taxes. . I don't do them- dh does, but I think this is what happened last year.

I had to take out a Stafford last year. And I don't think I got any of the tuition I paid in Spring '08 off because the whole thing was paid with a loan.

However, I get to take it off this year. I dropped below 6 credits/semester b/c I dropped out of the nursing program at my old school (VERY long story LOL). I've had to since start paying on my stafford- until I can get into another program in August- then I'll defer my loan. Maybe. Unless dh just wants to do something else. Because the amount of interest I'm paying is obnoxious,(I've got an unsecured Stafford) and I think we might be able to get a better deal if we re-finance the house- or something similar. But I think I can deduct something b/c I'm paying on it right now- and I downloaded some tax form from the loan servicing company I'm with.

I hope I didn't confuse you. Checking with school tomorrow's a good idea, because I could be wrong.

Cheryl
post #3 of 20
My experience was the same as Sneakymom's. I started back to school in a January, so I wasn't able to get loans until the following fall term. When I paid taxes I was only able to claim the semester I paid out of pocket, not the fall term that the Stafford loans paid for. Now that I'm on an assistantship rather than studnt loans, it works the same way. The school picks up ~85%, so I can only get a tax credit on the other 15% that I pay out of pocket.

If you don't get a good answer from the school, take a look at Form 8863 on the irs.gov website. That's what you'd use to file for the credit. I looked it up and it seems pretty unambiguous to me:

Quote:
Qualified education expenses must be reduced by
any expenses paid directly or indirectly using
tax-free educational assistance.
post #4 of 20
let me know what you find out, Bryan, I have the same question. My company pays for my schooling but only up to $3500 so I had to use a stafford loan to pay for some of last fal's tuition and I was wondering if I could claim that
post #5 of 20
I got this from this website regarding the 1098-T - http://www.nl.edu/StudentServices/st...1098T/faqs.cfm

It is probably from a different college, but the rule should apply for all schools.

Quote:
I paid my qualified tuition and related expenses with student loans. Can I still claim a Hope or Lifetime Learning Tax Credit or the Higher Education Tuition and Fees Deduction?



Yes. Loan funds should be considered in the same manner as cash payments when calculating a Hope or the Lifetime Learning Tax Credit or the Higher Education Tuition and Fees Deduction. However, any scholarships, grants, or other non-taxable aid must be deducted from the amount of qualified tuition and related expenses paid. The credit is claimed in the year in which the expenses are paid, not in the year in which the loan is repaid.
I work for a student loan company and if you have any questions regarding Stafford loans, feel free to PM me.
post #6 of 20
Quote:
Originally Posted by Essayons89 View Post
I started doing my taxes using Turbo Tax and I ran into something I'm not sure about. This question is mainly for people who have/had to file a 1098-T (Tuition Statement). I entered the correct information from my 1098-T into Turbo Tax and clicked to continue. The next page asked how much of the tuition amount was actually paid to the school. Since I'm using Stafford Loans and not paying out of pocket would the amount I was billed for tuition and related expenses be the same as how much was actually paid to the school?

As an example (not the actual amount) say I was billed $2200 for tuition and related expenses (Box 2 of the 1098-T). Would the amount that was actually paid to school also be $2200 since the tuition was paid by my student loan?

I want to contact the financial aid office at school and ask them on Monday. This is the last thing I need to do so I can file my taxes.

Thanks for any help. Feel free to PM with any information if you would rather do it that way.

Yes you can take the deduction even though it was a loan. I'm an accountant, pm if you have additional questions.

For example, if you are paying back a school loan, the interest you pay on the school loan is deducted from your gross wages. You receive a 1098 E for this...
post #7 of 20
Thread Starter 
Thanks but I'm still all confused about this. I haven't paid any interest or anything on the loan yet.

This what I have word for word with TT (except the amount) after completing the Form 1098-T Worksheet:

Quote:
Verify the amounts paid to (school name).

Out of the (dollar amount) that was billed by (school name), how much of this was actully paid to the school (including scholarships, fellowships or grants)?

Amount from 1098-T, Box 2 that was actually paid to the school_______
There was one of those "Explain This" links at the end of the above text. I clicked on it and got this explanation:
Quote:
Box 2 on the 1098-T is the amount that the school billed you, it's not necessarily what they received as payment from you or a lender. Check any student account statements or bank statements for amounts paid to the school if you're unsure.
The above for the amount to enter that was actually paid to school is where I'm stuck.

Hope this makes sense.
post #8 of 20
From what BMW and Meda are saying I think that you can claim your Stafford loans for what was paid to the university for tuition- if say your loan was for $3000 and $2500 went towards tution and $500 went to books, you could only claim the $2500 on your taxes Sweet!! I'll get to claim a little this year and a lot next year
post #9 of 20
Thread Starter 
Okay, I went back and added up the tuition that was paid for the last two terms and the asociated fees that went them and it added up to the amount in Box 2 on the 1098-T. Is that what I put down for how much the school was actually paid in tuition and fees since the amounts came out the same?
post #10 of 20
Quote:
Originally Posted by Essayons89 View Post
Okay, I went back and added up the tuition that was paid for the last two terms and the asociated fees that went them and it added up to the amount in Box 2 on the 1098-T. Is that what I put down for how much the school was actually paid in tuition and fees since the amounts came out the same?
sounds right to me
post #11 of 20
Quote:
Originally Posted by katiemae1277 View Post
From what BMW and Meda are saying I think that you can claim your Stafford loans for what was paid to the university for tuition- if say your loan was for $3000 and $2500 went towards tution and $500 went to books, you could only claim the $2500 on your taxes Sweet!! I'll get to claim a little this year and a lot next year
Yep that is correct.
post #12 of 20
Thread Starter 
I added the info for the tuition that was paid and it decreased my taxable income and increased the amount I was getting back. Is this normal? I need to go back over my deductions and make sure they are correct.
post #13 of 20
Quote:
Originally Posted by Essayons89 View Post
I added the info for the tuition that was paid and it decreased my taxable income and increased the amount I was getting back. Is this normal? I need to go back over my deductions and make sure they are correct.
Yes, that is correct. You will get more back.
post #14 of 20
Thread Starter 
Quote:
Originally Posted by Catkiki View Post
Yes, that is correct. You will get more back.
Thank you!

I guess I'm just a little surprised that the amount paid as tuition from my Stafford Loans qualifies as a deduction. This is all new to me.
post #15 of 20
I'm about ready to do my taxes! Hopefully I will get a nice refund with the help of my schooling
post #16 of 20
Thread Starter 
Good luck, Katie!

I'm going to wait a bit before I file. I have on payment left to make from the amount I owed last year and need the payoff amount. I also want to have one of my former supervisors at work (also a friend) look over my 1040 before I file it. He does taxes as a side business outside of work.
post #17 of 20
Here at least, if it is a loan they do count it towards your deductions as you will have to pay the loan back. It doesn't matter where you got the loan from, it could be your bank, parents etc. But if you got a grant that paid the tuition on your behalf and it is not expected back there are different rules
post #18 of 20
Quote:
Originally Posted by Essayons89 View Post
Good luck, Katie!

I'm going to wait a bit before I file. I have on payment left to make from the amount I owed last year and need the payoff amount. I also want to have one of my former supervisors at work (also a friend) look over my 1040 before I file it. He does taxes as a side business outside of work.
Thanks! Of course I can't find my 1098 so I had to request a new one, but my refund is looking pretty good even before the education credit
post #19 of 20
Thread Starter 
Quote:
Originally Posted by katiemae1277 View Post
Thanks! Of course I can't find my 1098 so I had to request a new one, but my refund is looking pretty good even before the education credit

We can print ours off of the school web site.

LOL...I can't believe I'm getting this much back.
post #20 of 20
Quote:
Originally Posted by Essayons89 View Post
We can print ours off of the school web site.

LOL...I can't believe I'm getting this much back.
I called the school to request another one and I just found the one I "lost" in the drawer I knew I put it in

Congrats on your refund!! Are you going to do anything fun with it? I'm not with mine I got some car work that needs done, tune-up, new front tires, plus my new appliance bill is due. Oh well, at least those will be off my to-do list
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