A 2017 freshman received his 2017 1098-T which includes box 2 for 2017 full, box 5 for 2017 full, and box 7 unchecked. He received the 2018 spring tuition bill in Dec. 2017 and paid in Dec. 2017. Like to check should his parents claim the tuition that they paid in Dec. 2017 in their 2017 tax return or in 2018 return? Based on the university tradition, the 2018 spring tuition will be shown on 2018 1098-T although it billed and paid in Dec. 2017. If they should claim it in 2017, how can they claim it because it is not shown on 1098-T? What should they do with this partial money that already claimed in 2017 when do 2018 tax return.
Generally, you want to report education expenses exactly how they are shown on the 1098-T. If the school did not elect to report the prepaid tuition, as Box 7 was unchecked, then the taxpayer should report the spring term tuition expenses in 2018.
If the school included the payments on the 2017 1098-T, with Box 7 checked, that would be a different story. The IRS says "Qualified education expenses paid in 2017 for an academic period that begins in the first 3 months of 2018 can be used in figuring an education credit for 2017 (if you meet all the other requirements for claiming education credits)." Click this IRS link below for more information.
Thanks CaroIC. Went through the publication 970, still do not get it. In June 2017 the student paid tuition and fee 8000 and received scholarships 6500 for 2017 full semester. In Nov. 2017 the student received same tuition and scholarships for Spring 2018 semester and paid in Dec. 2017. In 1098-T, it only includes these received and paid for 2017 full and leave box 7 unchecked. If we can included what paid for 2018 Spring semester the student can maximize the AOC, otherwise the student only get $1500. Like to know in which condition that the student can include these 2018 Spring semester payment? Thanks.
You bring up a good point about maximizing the AOC. But when you report tuition, you are only allowed to deduct what is reported on a 1098-T. Otherwise, the 1098-T reported on the return will not match the data the IRS receives. This may generate a mail audit. When it comes to deducting prepaid expenses, Box 7 needs to be checked.
The only exception to the 1098-T reporting requirement that I'm aware of is when the tuition was paid to a foreign school and a 1098-T was not generated.