You can only get a credit for education expenses paid in the tax year. Therefore, your qualified education expense for 2015 would be the expenses you actually paid in 2015. You would not include the amount paid in Dec. 2014 on your 2015 tax return. You would include Spring 2016 tuition if you paid it in 2015.
You will need to adjust the amount on your 1098T to reflect the amount actually paid for the year. To do this, click on the link titled "What if this is not what I paid to this school" under box 2 on the 1098T screen. You can enter the amount that was actually paid here.
Schools work in academic years, while the IRS works in calendar years. So the reality is, it takes you 5 calendar years to get that 4 year degree. With that said:
- Scholarships, grants and 529 distributions are claimed/reported in the tax year they are received. It does not matter what year that scholarship, grant or 529 distribution may be *for*.
- Qualified education expenses are claimed/reported in the tax year they are actually paid. It does not matter what year you may have paid *for*.
So technically, you could pay your qualified education expenses for all four years in the first year and be done with it. But that has the potential to hurt you in later years, as you would have maxed out all of your credits for all four years in the first year, if you paid all four years up front.