I just received a tax audit for my 2012 taxes and taking the education credits for two kids. They want documentation for my claim. I understand that. Here is my question. If the 1098 says they have $10,000 in grants and $10,000 in expenses, the logically you can't take the credit. But what if they used the grants that didn't have stipulations on their room and board? And used loans on their qualifying expenses. How do you show that to the IRS other than having it taxed on their returns?
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