Prepaid Tuition/Taxable Scholarships/AOTC question

one_two
Wed, 20 Feb 2019 14:21:54 +0000

I hope it’s ok to piggyback on this thread with a similar but slightly different scenario. For this year (2018 – son’s freshman Spring/sophomore Fall) I rounded numbers but it’s basically:

Tuition/Fees/Books: $50,000
QTP that must be used for tuition: $13,000
Scholarships/grants: $47,000
Room and Board: $8,000

Is this correct?
$10,000 of scholarships/grants is taxable and will go on the student’s tax return as additional income. He had $2000 refunded to him after R&B paid, but this would be part of the $10,000 ?

Can I/should I also allocate an additional $4000 of the scholarship money as taxable and use that for us to take the AOTC on our tax form?

This would put $14,000 additional income on his tax form.

He earned $5,500 in wages last year

Thank you for any help. I’ve puzzled over this reading and re-reading last year and this year. I think I may need to re-visit last year after I get this year settled, but it may have just been I didn’t take the AOTC when I could have by making some of the scholarship taxable to get the credit. But with different tax rates / only one semester it may not have worked.