Can I claim $955 in tuition payments paid to the New York City teaching fellows because they subsidized my masters program and paid PACE directly?

Forum|Forum|4 years ago
February 6, 2022
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I am paying over $400 a month in tuition payments to the New York City teaching fellows and they pay pace university directly. over two years I will pay $10,500 to them.

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Hal_Al

Employee

What does the New York City teaching fellows answer, when you ask them that question? It's gotta be a common question for them.

That said, the simple answer is yes, you can use those payments to claim the Lifetime Learning Credit (LLC). Grad school is not eligible for the more generous American Opportunity Credit.

I don't think you'll find that exact situation covered in IRS Publication 970. But, the similar situation is "Employer Tuition assistance/reimbursement". The tax free part is not claimable but the tuition paid with the part you pay tax on (essentially your after tax money) is. The fact that your money passes thru the hands of a third party doesn't change the fact that you paid the tuition.

helenteferi20Author

They said the following below. They don't technically say no it cannot be claimed.

"Thank you for reaching out to our office. Unfortunately, our office cannot issue a 1098-T form, because we are not an educational institution. You are currently paying back the DOE via paycheck deductions, which paid for your tuition upfront to your university. For this reason, your paycheck deductions may not be seen as a tuition payment, for tax purposes.

In light of this information, please work with a professional/tax preparer while filing your taxes."

Hal_Al

Employee

"You are currently paying back the DOE via paycheck deductions, which paid for your tuition upfront to your university".

That sounds like a loan. So, it depends on when you used the loan money for education. You can not deduct loan payments made this year that was repayment for tuition paid in previous years.

But if the school received the payment, this year, it does count. The school should be including the payment in box 1 of your 1098-T. What you have to be mindful of, schools frequently (and mistakenly) also put loan money received in box 5 (scholarships) of the 1098-T. There's a workaround in TT if that happens.

ZoltanB45

Sounds like the New York City Teaching fellows are acting like a bank with a school loan, minus the interest. If that is the case, you can treat your payments as such. You may qualify for either the American Opportunity Credit or the Lifetime Learning Credit. Here is a link from the IRS website comparing the 2.

AOC vs LLC