Tuition that you paid directly through a loan or personal cash payment is eligible for tax deduction. You may not claim a deduction on any portion of tuition or eligible expenses paid with tax-free educational assistance like a grant or scholarship.
Payments from a QTP DO qualify the owner (me) for a tax credit if the beneficiary (my daughter) is my dependent. The QTP is pretty specific about what they will and will not pay for. Almost everything it pays for qualifies as an educational expense as far as tax credits go, so it's a pretty good guideline for calculating expenses. According to the IRS,you can claim the expenses in the year they are paid NOT are billed; you will take the credit or deduction for the tuition and fees in the year they were paid.
Yes, that's exactly my point. The QTP PAID the bill in 2012, even though the school says they BILLED it in 2011, so it doesn't show up in the 2012 1098T. The 2012 payments are actually split between the 2011 1098T and the 2012 1098T, making it a bit confusing, and in our case, making it LOOK like she spent less than she received, when she really didn't. The educational institutions have 2 ways of reporting the expenses - what was paid or what was billed. It is your responsibility to keep your records of what you paid, and you should only take credit for your actual expenses.
Exactly. The school provided me with the details of what was BILLED, and I split them into what was PAID in 2012 and what wasn't. Then I claimed only what was PAID in 2012. Some of that was on the 2011 1098T... that was my point when I made the comment about why they ask if you have a 2011 1098T with Box 7 checked... (BTW they ask this on Form 8863, which I must file for the American Opportunity Credit.)
So I'm hoping the IRS knows that this situation comes up and they will understand what I did.