I attended a university about a year and a half ago and because of my financial situation I wasn't able to actually pay for the courses I took. In the middle of 2012 The university began to garnish my wages to recoup their money. Because its a garnishment, does it count as a payment for tuition/fees, and should I include them on my taxes? The second part of my question is will the university file a 1098-t form for me this year even though I've made payments via a garnishment and not on my own?

ANSWER

The BIDaWIZ Team's Answer:

So, you never paid tuition and the college obtained a court order to have a collection agency garnish your wages? If that's the case, then you may or may not receive the form 1098-T. If the liability was sold to a collection agency, it would be up to them to furnish the form; doesn't always happen. However, whether or not the garnishment is deductible, will depend largely on the character of the expense. If the expense meets the guidelines for the Tuition and Fees deduction or the American Opportunity Credit, then you can certainly claim it on your tax return. In essence, whether or not you paid the expenses initially on your own or through wage garnishment, doesn't change the character of the expense to you. Please note though that any interest and penalties associated with the expenses for failure to pay would not be deductible.