Prepaid college tuition

[pergurd]

Years ago we signed up for the state's plan. This year the offspring
is in college with the state sending the check to the college. My
daughter got the 1099Q and 1098T forms. Can I claim the education
deductions (income limits withstanding) even though I didn't
technically pay for college in 2007? If so, where would the 1098/1099
go on MY 1040?

 

[Ron Hardin]

Years ago we signed up for the state's plan. This year the offspring
is in college with the state sending the check to the college. My
daughter got the 1099Q and 1098T forms. Can I claim the education
deductions (income limits withstanding) even though I didn't
technically pay for college in 2007? If so, where would the 1098/1099
go on MY 1040?

I'm surprised they're not imputing income to you for the current
value of the tuition minus the amount you paid for it, as a capital
gain at best.

Not because they should, but because taxpayers lose with every possible
source of revenue when they have a choice how to interpret it.

Maybe you paid for the education when you bought the plan, and that's
when the deduction ought to have happened. Who knows.

 

[Arthur Kamlet]

I'm surprised they're not imputing income to you for the current
value of the tuition minus the amount you paid for it, as a capital
gain at best.

Not because they should, but because taxpayers lose with every possible
source of revenue when they have a choice how to interpret it.

Maybe you paid for the education when you bought the plan, and that's
when the deduction ought to have happened. Who knows.

Ron, it's generally better than imputing income of any sort.

If the 529 plan amounts are used to pay for allowed education
costs, even high school, none of the amount is taxable.


But if a 529 disribution is taken and spent on a trip to Las Vegas,
then the gain on the amount is taxed as ordinary income. That gain
is entered on Form 1040 Line 21.

I've never seen it happen, but that is the rule.


Only capital assets are potentially subject to capital gains.