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grants being taxed as unearned income
My daughter just graduated in December, in 7 semesters. She received a significant amount of grant money each semester. I am working on taxes and realize now that the college pays its grant money for the spring semester in the spring semester. I generally paid spring tuition in December. This year, on our 1098-T, we received more grant money than paid qualified expenses. (because scholarships were for spring and fall semesters of 2019 but tuition payment only included fall 2019 since spring 2019 was paid the previous year in December). Now we have about $20,000 of unearned income and will lose the American Opportunity Tax credit. Has anyone else run into this, and is there a work around?5 replies