Are past-due school tuition payments from collections tax deductible?

You've asked a really good question that trips up a lot of people. When it comes to education expenses, timing matters a lot for tax purposes. The IRS generally only allows you to claim education expenses in the year you actually paid them, not the year you took the classes. So even though the tuition was for classes in 2022, since you paid it in 2023, the 2023 tax year is what matters for deduction purposes. For education expenses, you might qualify for either the Tuition and Fees Deduction, the American Opportunity Credit, or the Lifetime Learning Credit. The American Opportunity Credit is usually the most valuable but has specific requirements (must be pursuing a degree, first 4 years of college, etc.). Regarding the forms, the school should have issued a 1098-T for the year you actually paid the tuition (2023). If you didn't receive one, I'd recommend contacting both the school and the collection agency to request it. Without proper documentation, claiming these deductions can be challenging if you're ever audited.

Had a similar situation last year and discovered taxr.ai (https://taxr.ai) which really helped me figure out my education expense deductions. I was also making payments to a collection agency for old tuition and wasn't sure how to handle it. The tool analyzed my situation and clarified that I could claim the Lifetime Learning Credit for past tuition in the year I actually paid it, even though I was no longer a student. Basically you upload your tax documents and it shows you which education credits you qualify for based on your specific payment situation. It even explained why I didn't qualify for the American Opportunity Credit but could still get some benefit from the Lifetime Learning Credit despite paying old tuition.

Guys I tried that taxr.ai site after posting my skeptical comment and I'm actually really impressed! I've been dealing with the same issue - paying off old tuition to a collection agency with no 1098-T. The tool walked me through exactly how to claim the Lifetime Learning Credit using my payment documentation from the collection agency. The analysis showed I qualified for a $2,000 credit even though TurboTax had rejected my claim because I didn't have the proper form. It explained exactly which documentation to keep for backup. Just filed my amended return and should be getting about $1,400 back! Wish I'd known about this sooner.

I was in the same situation last year trying to get answers from the IRS about my past-due tuition payments. Called for weeks and never got through. Finally found Claimyr (https://claimyr.com) and they got me connected to an actual IRS agent in about 15 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c The IRS agent confirmed that I could claim education expenses in the year I paid them (even to collections) as long as I had proper documentation of the payment. They explained that while schools typically issue a 1098-T, when collections are involved, you can use alternative documentation like bank statements and payment receipts. Saved me hours of frustration and helped me claim about $2,500 in education credits I would have missed.

I need to eat my words. After posting my skeptical comment, I decided to try Claimyr out of desperation since I've been trying to reach the IRS about my education credits for weeks. Got connected to an IRS agent in about 20 minutes. The agent confirmed exactly what I needed to know - that I CAN claim tuition paid to a collection agency on my taxes even without a 1098-T form. Just need to keep documentation proving the payment was for qualified education expenses. This changes everything for me since I paid over $8,000 in past-due tuition last year. Just wanted to share since I was wrong and this actually saved me a lot of money. The agent even helped me understand which credit would be best for my situation.

Something nobody's mentioned yet - check if you qualify for the above-the-line tuition and fees deduction instead of a credit. Sometimes this is better depending on your income level. You'd use Form 8917. Also, make sure the collection payments were actually for tuition and qualified expenses, not for other fees or penalties which might not be deductible.

Has anyone actually tried amending previous years' returns to claim education credits for past tuition payments? I'm in this exact situation and wondering if it's worth the hassle.

Important: Make sure the collections payments were specifically for qualified education expenses (tuition, required books, etc). If they included things like room and board, parking fees, or late payment penalties, those portions aren't deductible for education credits. You'll need to separate out the qualified vs non-qualified expenses.