This is ethically questionable, I'm sure of that. However, this is an expense that was made and should be, according to the information I am provided, acceptable. This is also a purchase that will not show up on a 1098-T.


No, you can not expense something you didn't spend. A payment refunded is not payment paid.

  • Just to be clear, this was an amount paid in full and then later refunded (weeks later). Your answer still applies correct? – Curious Fellow Feb 10 '14 at 8:34
  • Of course. Generally if you claim American Opportunity Tax Credit, but the tuition amount doesn't match 1098-T - prepare to be audited. – littleadv Feb 10 '14 at 8:39
  • My understanding of the AOTC is that the expenses you are claiming are tuition + non-tuition (books & materials that are required by the school or not required but needed). So a computer, for example, can be included if your course requires you to type up an essay. In addition, they give you $1000/yr for 4 years if you claim it, without claiming any additional expenses. – Curious Fellow Feb 10 '14 at 8:47
  • I don't think you're right. Go through the publication 970 again. You can definitely not include a computer for this credit, unless it is explicitly required and only used for your studies - which is rarely the case. Quote: - Qualified expenses: Tuition, required enrollment fees, and course materials that the student needs for a course of study whether or not the materials are bought at the educational institution as a condition of enrollment or attendance. – littleadv Feb 10 '14 at 8:55
  • Relying on chances of being audited is generally a bad idea. This is called "audit roulette", is a sign of fraud, and may cause the IRS to remove the statute of limitations from your relevant returns (there's no statute of limitation on fraud). – littleadv Feb 10 '14 at 9:00

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