Tax Return, Tuition Loan Write-off Question (taxes, rate, credit, charge)

[NTexas2010]

My wife graduated in December 2010 and had student loans left over. When we got married in July of 2012, I went ahead and paid off her student loans of about $14k. We are filing married jointly for 2012 and want to see if we can use this as a tax write off on the tuition principle that we paid on, despite the fact that she has been out of school since 2010. We already got the forms for the interest paid on her student loans, but I'm looking to see if we can write off some of the expenses associated with the actual principle of the loan itself.

Any help is appreciated.

[ukrkoz]

yes, but it's too late. what you need to do is to do amended return for 2010. If you are doing your taxes yourself, read carefully description of what you can deduct - it clearly says "all" expenses. I burnt myself back in time, when I did not realize that tuition is deductible - maybe at lower rate - as much as interest paid.
But you can not deduct 2010 expense on 2012 return. They'll get you. Been there too. Amend your 2010 return, you can go back 3 years.

[NTexas2010]

Awesome thank you for the help.

[Mike From NIU]

Originally Posted by ukrkoz

yes, but it's too late. what you need to do is to do amended return for 2010. If you are doing your taxes yourself, read carefully description of what you can deduct - it clearly says "all" expenses. I burnt myself back in time, when I did not realize that tuition is deductible - maybe at lower rate - as much as interest paid.
But you can not deduct 2010 expense on 2012 return. They'll get you. Been there too. Amend your 2010 return, you can go back 3 years.

Uh, not necessarily. There are credits and deductions for tuition charged during the year(s) she went to school. However, she may have already taken a HOPE or Lifetime Learning Credit for that/those period(s). Also, the principal balance does not indicate how much is deductible. The deduction/credit is normally limited to a percentage of eligible expenses paid, not the full amount (and a loan issued for those periods counts as tuition paid), and may or may not be refundable. Again, the rules vary for the particular credit or deduction she may be eligible to take.

You and your wife will need to look at her tax returns for the year(s) she was in school. Also, if she was claimed as a dependent during those years by her parents, they may have taken the related deductions/credits. If so, you cannot also claim those same credits or deductions for her.

Finally, the education credits and deductions are available for the year in which the expenses occur, not in which an eligible loan is paid off. So, only tuition and fees for 2010 would be eligible for education credits and deductions for that year. Loans taken out for tuition and fees in 2009, 2008, etc. can only provide credits and deductions for those respective time periods.

So, ukrkoz was on target regarding the need to file an amended return in order to get anything back from 2010. However, I would not automatically file an amended return for 2010 expecting a full write-off of the principal balance.