I recieved a CP2000 letter for tax year 2016. I used the 1098T form my school provided me dated for 2016. Now they say I owe $338.

[desimone06]

I recieved a CP2000 letter for tax year  2016. I used the 1098T form my school provided me dated for 2016 for credits earned in spring 2017. On my schools website they say that they issue a 1098T for the year the credits were BILLED. This January I received a 1098T dated 2017 for credits billed from summer 2017- spring semester 2018. This is so confusing to me, I dont know what to do.  The IRS is saying I owe them $338. I already provided them a copy of my billing statement, and a letter from the college stating the money was paid. I understand the IRS says the credits claimed are for the wrong year. But my school issues bills for the the school year not a calendar year. Should I have saved the 2016 1098T form and used that along with my 2017 form this year? Any help on this matter would be greatly appreciated! 

[IsabellaG · Accepted solution]

Yes, you need to claim your qualified educational expenses in the year that you pay them. It is confusing when the 1098-T shows the amounts billed. If the billed amount isn't the same as what you paid that year, you need to indicate that when you enter the 1098-T.

In TurboTax, when you enter the 1098-T, click on the blue words, "What if this is not what I paid?" and a drop down will appear and you can enter your actual payments for tuition for 2017.