If you, your spouse and/or your dependents have tuition or fees due for the January
2017 school year then paying them before the end of the year could increase the amount of credit or deductions in 2016. Most educational institutions require the payments prior to the end of the year so it is most likely that this will be done already. However, if you are thinking about deferring that payment into January of 2017 then maybe we need to discuss the tax issues that may impact you.
Education Credits and Tuition and Fees Reporting Issues
n late December 2015, Congress passed tax legislation called the PATH Act (Protecting Americans from Tax Hikes). One of the provisions in this legis- lation requires that the educational insti- tutions must issue the IRS Form 1098-T which must report the actual Tuition and Fees paid to the institution during the tax year. Prior to this legislation, the institu- tion could report the amounts billed for tuition and fees. There were times when the actual amounts paid in a tax year were not the same as the amounts billed for that tax year. The institutions may no longer choose which amounts to report on the Form 1098-T as under prior law. In a recent announcement, the educa- tional institutions were given some relief by the IRS, and the amount billed may still be reported instead of the amount paid on the 2016 Form 1098-T. In addition, taxpayers must report the institu- tion’s Employer Identification Number (EIN) on the tax return in order to receive an American Opportunity Credit or a Deduction for Tuition and Fees.
The PATH Act also requires that I must do additional due diligence in determining eligibility for your education credits and deductions so I will ask that you submit a copy of the Form 1098-T to me when you give me your tax data for 2016. If you have any questions about the opportunity for receiving education credits or deductions please contact me.