When does Spring 2025 tuition payment count for tax purposes - 2024 or 2025?
Not directly FASFA related but I know we have very knowledgeable folks here who will know the answer to this. If I pay the Spring 2025 tuition bill now prior to 1/1/25 will it count toward 2024 taxes since I paid it now or will it be 2025? I called the school and didn't seem like the person who answered had a clue. Looking to increase my education expenses for 2024. Thank you in advance.
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Nia Thompson
I'm pretty sure it counts for whatever year you actually make the payment, not when the classes are taken. So if u pay in 2024, it should count for 2024 taxes. But dont just take my word for it, see what others say.
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Luca Greco
•Thanks! That's what I was hoping but just wanted to be sure before I move forward with payment.
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Mateo Rodriguez
that's right - if you pay Dec 31, 2024 it's for 2024 tax year even if class is in 2025. But if you pay Jan 1, 2025 then it's for 2025 tax year. It's all about when money changes hands not when service happens
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Luca Greco
•Perfect! I'll make sure to submit payment before the end of the year then. Thanks!
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Aisha Hussain
Tax professional here. Yes, qualified education expenses are deductible in the year you pay them, not the year the classes are taken. This is covered under the cash method of accounting for individual taxpayers. Make sure you get and keep your receipt showing the 2024 payment date as documentation. Also be aware there are income limits on education tax credits and deductions, so check if you qualify before paying early.
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Luca Greco
•That's really helpful, especially the reminder about keeping the receipt with the 2024 date. I'll double check the income limits too to make sure I qualify.
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GalacticGladiator
I actually dealt with this last year when paying for my daughter's Spring 2024 classes in December 2023. The school financial office told me they'd issue a 1098-T showing the payment in 2023, which is what I needed for claiming the American Opportunity Tax Credit. Just make sure your school does the same - some schools report tuition on the 1098-T when billed rather than when paid, which can cause confusion.
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Luca Greco
•That's a really good point about how the school reports it. I'll double check with the financial aid office about how they'll record it on the 1098-T. Don't want any issues when filing taxes!
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Ethan Brown
My sister did this last year and it TOTALLY messed up her FAFSA because they thought she had already paid for school when she was still needing aid. Just be careful!!!
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Aisha Hussain
•This is an important point. Prepaying tuition shouldn't directly affect FAFSA calculations, but it's always good to check with your financial aid office. The FAFSA uses prior-prior year tax information, so your 2025-2026 FAFSA would use 2023 tax info anyway. But if you're receiving need-based aid this academic year, it's worth confirming with your financial aid office that prepayment won't affect current disbursements.
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Yuki Yamamoto
Has anyone tried reaching Federal Student Aid directly about this? I had a similar question last month and spent DAYS trying to get through on their phone line. Finally used a service called Claimyr (claimyr.com) that got me past the wait time so I could actually speak to someone. They have a video showing how it works at https://youtu.be/TbC8dZQWYNQ - totally worth it when you need actual official answers straight from FSA rather than guessing.
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Mateo Rodriguez
•FSA probably won't help with tax questions tho. They just do financial aid stuff not tax advice.
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Yuki Yamamoto
•True, but in my case I needed to know how the prepayment would affect my aid package, which they could answer. For pure tax questions, IRS would be better.
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Carmen Ruiz
DON'T DO IT!!!! I prepaid tuition in December 2022 for Spring 2023 and the IRS REJECTED my education credit claim!!! They said the 1098-T showed different amounts than what I claimed because my school recorded the CLASSES not the PAYMENT DATE on the form! It was a NIGHTMARE to fix and I had to get documentation from the bursar's office proving when I actually paid. Save yourself the headache and just pay when it's due!
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Aisha Hussain
•This illustrates exactly why it's important to verify how your specific school handles the 1098-T reporting. Some use the payment method (Box 1 filled) and others use the amounts billed method (Box 2 filled). If your school uses Box 2 (billed), you might need additional documentation showing when you actually made the payment.
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Luca Greco
•Wow, that sounds awful! I'll definitely check exactly how my school handles the reporting before making any decision. Thanks for the warning.
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GalacticGladiator
Just checking back - did you ever figure out what you're going to do? I'm considering prepaying my son's Spring 2025 tuition before December 31st as well to boost my education credits for 2024.
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Luca Greco
•I've decided to go ahead with the prepayment. I spoke with both the bursar's office and my tax advisor. The school confirmed they report payments in Box 1 of the 1098-T (when paid, not when billed), and my tax advisor confirmed I should be eligible for the credit. Just make sure to get confirmation from your school about how they handle the 1098-T before you decide!
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Ethan Clark
Great to hear you got it sorted out! For anyone else considering this, I'd also recommend checking if your state has any additional education tax benefits that might be affected by the timing of payment. Some states have their own education credits or deductions with different rules than federal. Also worth noting that if you're using a 529 plan to pay, the withdrawal should be made in the same tax year as the payment to avoid any complications with qualified distributions.
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