My son is a 22 year old college student who qualifies as a dependent (we continue to provide more than 1/2 of his support and he lives in our home more than 1/2 of the year). He is financing his education via Sallie Mae loans. The institution has sent form 1098-T. Can his 2006 tuition expenses paid with loan proceeds be a deduction on his or our 1040 return?
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Yes, loan proceeds are considered income provided by the signer of the loan, so you can still take education credits or deductions. But if the student signed the loan and the amount is large enough, this may affect the >50% of the support you provided, as the loan proceeds are considered support provided by the dependent. Dennis
Yes. Source of funds is not a factor. If the money was paid in the period in question for the purpose defined, then it's a legitimate expense, for purposes of a tax credit or allowable deduction. Bill
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