Can I claim expenses on the 1098T used for my grandchild an expense. IRS says "yes", Turbotax says "No". Which is right?

[xmasbaby0]

You cannot deduct anything for your grandchild's education expenses unless you are claiming your grandchild as a dependent on your own tax return.  If the child is not a dependent on your tax return, you gave a gift to them, which is not deductible.   Helping your grandchild by paying for their education makes you a kind and generous grandparent.   Only the person who claims the child can use the education credit.

Gifts given to family members, friends or other individuals are not deductible.   Gifts received are not taxable to the person who received the gift, and are not entered on a tax return.

If your gift exceeds the yearly limit ($18,000 per individual)  imposed by the gift tax rules, then you will need to complete a Form 709 gift tax form and send it to the IRS, although it is very unlikely that you will owe any tax.

TurboTax does not support Form 709.  It is not an income tax form and would not be included as part of an income tax return.

Here is a link to the form:

https://www.irs.gov/pub/irs-pdf/f709.pdf

https://turbotax.intuit.com/tax-tips/estates/the-gift-tax-made-simple/L5tGWVC8N

[Hal_Al]

The IRS does not say "yes".  You're misreading it. Only the person claiming the student as a dependent can claim the tuition credit (or the student himself, in limited circumstances). 

But, whomever does claim the credit, whether it be the  parent or the student himself, they may count the tuition and expenses, you paid, in claiming the credit for themselves. Although the general rule, in taxes, is that you must be the one making the payment, to get the deduction or credit, there is an exception for education.

[Hal_Al]

If you got a distribution from a 529 plan, where you were the owner (and recipient), and your grandchild was the beneficiary, then, yes, you can claim the  expenses on the 1098T  to keep that distribution from being taxable.  But, you must coordinate with the parent and/or student so that there is no double dipping.  You cannot use the same expenses that the parent uses to claim the tuition credit or the student uses to claim his scholarship as being tax free. The family must allocate the available expenses to the three (or more) tax breaks.