I often used payment plans to pay for my college expenses, and therefore would sometimes, for example, pay for the last bit of the 2015 year in the beginning of 2016. Similarly, the charges for the spring semester would sometime be charged before January first. So my question is as stated in the title:
Are the expenses used in calculating the American Opportunity Credit
based on the date of the charge, date of the classes, or the date of the
payment?
While doing the TurboTax Ammend process for 2015, if you click the "Learn More" link on the "Was any of the scholarship income not designated to pay 2015 education expenses?" field you get the following message:
"Scholarship Income Not Allocable to 2015
Scholarship income must reduce qualified education expenses for each period of study that assistance is allocable to. However, sometimes scholarship income is not received at the same time education expenses were paid. This can cause your scholarship income to be overstated in one year and then understated in another year. If you received scholarships or grants in 2015 for expenses reported in a year other than the current year, enter an amount here to reduce your scholarship income amount. You will need to include that same amount as scholarship income in the tax year in which the education expenses are actually reported.
For example, in 2014 you received a 1098-T with $4,000 for your fall 2014 expenses which you reported on your 2014 tax return. In 2015 you received a 1098-T that included tuition expenses of $6,000 and $10,000 of scholarship income. $4,000 of the scholarship was actually for your 2014 expenses. You will enter $4,000 here to reduce your scholarship income to $6,000 for 2015. You may also need to recapture any education credit or deduction taken in 2014 that would have been disallowed in 2014 due to the additional $4,000 of scholarship income allocable to 2014 education expenses."
This makes it sound like (for scholarships at least) what matters is not when the money changed hands, but rather the school term to which the money is allocated. Is this unique to scholarships? Or is it the same for all of the expenses and payments?
The answer to this will make a big difference for me because of the fact that I used payment plans and often payed a significant portion of my expenses after the term was over.
