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.
