“ Her employer pays for her tuition so anything listed on this form cannot be claimed by us right?”======>in general correct.IRS Form 1098-T is the information return that colleges and universities are required to issue for the purpose of determining a student's eligibility for the American Opportunity Credit and Lifetime Learning education tax credits. However, if your spouse’s ER reimburses her for tuition or other college expenses, she still can exclude up to $5,250 of the reimbursement from her income as long asthis is paid through an employer-provided educational assistance program each year. This means your wife's employer should not include the benefits with her wages, tips or other compensation shown in box 1 of her Form W-2. If that is the case you cannot use any of the tax-free education expenses paid for by the employer as the basis for any other deduction or credit, including the Hope and the lifetime learning credit regardless of when you received the benefitIf her ER does not reimburse her for college expenses, she can deduct the cost of tuition as a biz expense if the education was necessary to improve her job skills or was otherwise related to her ability to perform her job. The IRS does not consider certain expenses to be qualified educational expenses in any circumstances. As of 2011, you cannot deduct room and board, health service fees including insurance and mandatory student health fees or transportation fees. In most cases, you also cannot deduct expenses associated with sports classes or other non-credit classes, although these fees do qualify if you are required to take the course to earn your degree. If you make less than a certain amount for the year as of 2011, less than $160K if you file a joint return with your spouse you can deduct up to $4k of your college tuition and fees from your tax return. Taxpayers who make more than this amount may be able to deduct up to $2k of their college tuition and fees for the year. You cannot claim this deduction if you are claiming an educational tax credit.