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Merlo
Merlo, Accountant
Category: Tax
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Experience:  25+ years tax consulting. Specializing in returns for US citizens living abroad
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We offer a sliding scale for tuition. If a parent indicate

Resolved Question:

We offer a sliding scale for tuition. If a parent indicate they should pay less the top level of tuition do we have to require them to provide us with a copy of their W-2 or paycheck?
Submitted: 8 years ago.
Category: Tax
Expert:  Merlo replied 8 years ago.

Hello Vivian,

 

Normally schools or programs that offer fees based on a sliding scale usually require a copy of the last year's tax return.

 

The reason for this is that a check stub or single W-2 form may not really give you the true picture of what the person's total income really is. As an example, if someone has a full time job and a part time job, they could simply give you one of the W-2 forms and not the other. Or both spouses may work and yet they only provide a W-2 form for one spouse. They may also have income from self employment or other sources, so requesting a copy of last year's tax return is the only way to get a true picture of their income level, and this is what most schools require.

 

If this has been helpful please press the Accept button. Positive feedback is also appreciated.

 

Thank you.

 

Customer: replied 8 years ago.
I understand why you would want a w-2 versus a paystub but I need to know if it's required documentation that they provide the W-2. If we get audited by the IRS will they be looking for proof that the parent should have paid a certain tuition?
Expert:  Merlo replied 8 years ago.

Hello again Vivian,

 

If you are a private school, then even though you may have a sliding scale for tuition, the IRS is not concerned how you determine what to charge each student or family. Their only concern is the payment of taxes. It is not the job or the responsibility of the IRS to monitor the fees you charge.

 

It is really no different than any other business. If I am in the business of selling cars and I sell a car to XXXXX XXXXX for $10,000 and then turn around the next day and sell the same car to XXXXX XXXXX for $7,000, the IRS cannot and will not dictate what price I can or cannot charge for my products or services. The same applies to your tuition fees even though you offer a sliding scale. The documentation you choose to require or if you choose to deviate from that scale is entirely up to you.

 

If this was helpful please press the Accept button. Positive feedback is also appeciated.

 

Thank you.

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