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My wife and I took the Tuition and Fees Deduction in 2015 after receiving a 1098-T from her accredited University that had box 2 (Amounts billed for qualified tuition and related expenses) as $5603.80. The same year, we received $5645 in assistance paid directly to the school from Americorps for a program my wife was participating in.

In addition, we had a good bit of carryover tuition from the previous year that we had not yet paid which we then paid for in 2015. We paid about $5,133 out of pocket for tuition in total in 2015.

Now we have received a CP2000 letter saying we were ineligible for the 2015 Tuition and Fees Deduction and owe $500 in back taxes and an additional $28 in interest. I assume this is because of the Third Party Assistance.

My question is, can we fight this and assert that we deserve to take the Tuition and Fees Deduction when we spent $5133 out of pocket for tuition that year? If not, would we be eligible for any other deduction or credit which would get us out of having to pay back this $528?

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    Why do you assume it was due to the third party assistance? Does the letter not say anything about why you were ineligible? Doesn't the letter provide a means of responding? The short and unhelpful answer is that if you were eligible to claim the deduction, then you can claim it. But whether that is the case depends on many factors.
    – BrenBarn
    Aug 4, 2017 at 5:11
  • @BrenBarn the reason I assumed it was because of the 3rd party assistance is because the amount we received in assistance was equal to the amount we were billed that year. All the letter says is that the deduction claimed needs to be verified because the eligible institution did not report the amount claimed on your tax return and they ask for a signed explanation of the amounts paid to support the amounts claimed.
    – Andrew
    Aug 4, 2017 at 14:16

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