No Education Credit without Proof of Tuition Payment

An American opportunity credit of 100% of the qualified tuition and other related expenses up to $2,000, plus 25% of such costs of the next $2,000, for a total credit of $2,500. The credit applies for the first four years of higher education by taxpayers with modified adjusted gross income below certain limits and 40% is refundable. The credit is based on the amount of qualified tuition paid, as indicated on Form 1098-T. But what if a student attends school abroad where no Form 1098-T is issued? That’s what happened in a recent case.

The daughter of a taxpayer attended school at University College London and he claimed the credit based on her tuition (converted into U.S. dollars). However, the Tax Court disallowed the credit because he could not produce a receipt or other solid evidence of the amount of tuition he paid. While the court was sympathetic to the difficulty in procuring documents and it was likely that he did make payments, the record before the court did not support the claim that he actually made the payments.