Which of the following statements is not true regarding the education credits?

A) If a dependent pays for qualified expenses,the expenses are deemed paid by the taxpayer.
B) If a relative makes payments for qualified expenses directly to the institution on behalf of the student,the expenses are deemed paid by the student.
C) If a student receives a scholarship that is excluded from gross income,that amount should reduce qualified expenses.
D) Payments made using borrowed funds are not considered qualified expenses.

Question

Beatriz Chacon · Accepted Answer

Final Answer : D, Explanation :  Payments made using borrowed funds are considered qualified expenses for the purpose of calculating education credits. The source of the payment (whether it's out-of-pocket, from savings, or borrowed funds) does not affect its qualification.

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