Can I use my judgment in deciding on a Qual. Tuition & Related Expense?

[Dyons]

I have a question about Qualified Tuition and Related Expenses (QTRE), specifically how much of it is what the school decides (based on their understanding of the IRS rules) and how much of it can be the taxpayer’s judgement.

My son’s school has provided what they consider QTRE in Box 1 of his 1098-T. (They helpfully provided a document identifying what the QTRE includes – Tuition, of course, but also Student Activity fee, College fee, Technology fee, Wellness fee, Drug Testing fee, and Lab expenses for various classes. In keeping with IRS rules, they point out that insurance fees, health fees, student athletic fees and any administrative fees are NOT QTRE.)

My question is about a specific fee charged by the school for a very specific matter: My child is a cadet at a Marine Academy and, as a part of his degree, which includes getting a third mate’s license, is required to spend mandatory time (45-90 days) at sea each year. This is done on a training ship owned by the school – a fully accredited school, by the way. We had to pay for something called a “Ship maintenance fee” as a part of his college fees.

This does not seem to have been included in the QTRE and I wonder why not. (The school did not offer any explanation when I called to inquire.) After all, being on board the training ship is necessary (indeed mandatory) for graduation from this marine academy, and this is not a student-specific charge peripheral to the degree requirements. My question is: can I include this in calculating the actual (in my opinion) QTRE?

Can I use my judgement, in this specific case, to include this “(ship) maintenance fee” in QTRE despite the fact that the school did not?

Any response would be appreciated. Thanks very much in advance.

[dcandmc]

The first things I would be questioning would be the school identifying the "wellness fee" and the "drug testing fee" as qualified expenses. You even point out that health fees are not QTRE according to the IRS. And what does the "college fee" cover? That and the "technology fee" sound like they could be administrative in nature, and therefore also not qualified expenses. It would hardly be a surprise if the school screwed up the 1098-T.

Without knowing specifically what the fees are meant to pay for, it's impossible to determine whether or not they fall within the IRS definition of QTRE.

[Dyons]

Thanks, @dcandmc, for your response. You raise precisely the point that also concerns me about the amount indicated in Box 1 of the 1098-T and the school's inclusion of certain fees - and not others - in that figure.

The likelihood of the school listening to my reasoning and changing my 1098-T (and those of thousands of other students) is, I think you will agree, slim.

However, my question (in the OP and now) still remains. Do I have any leeway in deciding what are qualifying expenses, or I bound to what the school has chosen to include in the 1098-T?

Apart from the statements in Pub. 970 about what may be considered QTRE, can I use as a criterion the fact that a fee is applicable to all students for their common education benefit (and not merely an administrative overhead) to include it in QTRE?

Specifically, I want to include this "Ship maintenance fee" in my QTRE bucket. As I understand it, the training ship is kept shipshape through the labor of students, who perform chores in ensuring its shipworthiness during a training cruise. As I see it, this is a part of their education at a marine academy and is not similar to a "wellness fee" and such examples.

Any thought on my specific question would be greatly appreciated.

Thanks, again.

[dcandmc]

However, my question (in the OP and now) still remains. Do I have any leeway in deciding what are qualifying expenses, or I bound to what the school has chosen to include in the 1098-T?

Yes, you should decide based on the rules and guidelines as provided by the IRS. The information provided by schools on 1098-T forms is notoriously inaccurate.

Apart from the statements in Pub. 970 about what may be considered QTRE, can I use as a criterion the fact that a fee is applicable to all students for their common education benefit (and not merely an administrative overhead) to include it in QTRE?

Using your own criterion in place of that provided by the IRS is problematic. Unfortunately, the guidelines provided by the IRS in this area are not always clear and easy to follow.

Specifically, I want to include this "Ship maintenance fee" in my QTRE bucket. As I understand it, the training ship is kept shipshape through the labor of students, who perform chores in ensuring its shipworthiness during a training cruise. As I see it, this is a part of their education at a marine academy and is not similar to a "wellness fee" and such examples.

Any thought on my specific question would be greatly appreciated.

Work within the IRS guidelines as best you can, decide on your course of action, and then be ready to defend it if the IRS raises questions. That's really the best advice I can give you, and I know that it really doesn't help much. I can't answer your question with a black and white yes or no, and it would surprise me if even a CPA or professional tax preparer could either.

[Dyons]

Thanks, @dcandmc, for your thoughtful response. It was really helpful.
Best regards.