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If your daughter is your dependent - she may not claim a credit for educational expenses.
Expenses to purchase books are not reported on the form 1098-T - you need to have separate receipts for these expenses.
Your are eligible to deduct educational expenses if your modified adjusted gross income (MAGI) is below certain level.
For 2009, the amount of your Hope or lifetime learning credit is gradually reduced (phased out) if your modified adjusted gross income (MAGI) is between $50,000 and $60,000 ($100,000 and $120,000 if you file a joint return). You cannot claim a credit if your MAGI is $60,000 or more ($120,000 or more if you file a joint return).
For Tuition and Fees Deduction
If your modified adjusted gross income (MAGI) is not more than $65,000 ($130,000 if you are married filing jointly), your maximum tuition and fees deduction is $4,000. If your MAGI is larger than $65,000 ($130,000), but is not more than $80,000 ($160,000 if you are married filing jointly), your maximum deduction is $2,000. No tuition and fees deduction is allowed if your MAGI is larger than $80,000 ($160,000).
You may see for reference IRS publication 970 - http://www.irs.gov/pub/irs-pdf/p970.pdf - this publication was just recently updated - please verify if have an updated version.
Please be aware that there is a new educational credit - American Opportunity Credit - you may find details in the publication
Only you may claim educational expenses for your dependent daughter.
You may claim only expenses that you paid from after tax funds - these included those paid with student loans.
The form 1098-T may not give you the full information - and you need to verify with other documents.
The box 2 on the form 1098-T reports "Amounts billed for qualified tuition" - you need to verify if that amount was actually paid with other documents. Also that amount may include expenses for previous and following year that are billed in 2009 - you only may deduct those that were actually paid in 2009.
The box 5 reports the amount of "Scholarships or grants" - that amount is subtracted from the amount paid if you are not required to pay it back (that is correct in most situations but not always)
Let me know if you need any help.
If scholarship is taxable - it is reported on the recipient's tax return - the recipient of the scholarship is your daughter - not you - so it would be reported on her tax return.
I might use "your" as a generic term - sorry for confusion.
To determine the taxable portion of the scholarship - use the worksheet in IRS publication 970 page 6 - http://www.irs.gov/pub/irs-pdf/p970.pdf
Also see on the next page how to report taxable portion of the scholarship - depending on which form you are using:
If you file Form 1040, include the taxable amount in the total on line 7. If the taxable amount was not reported on Form W-2, also enter "SCH" and the taxable amount on the dotted line next to line 7.