American Opportunity Credit

Forum|Forum|5 years ago
March 3, 2021
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My 1098-T shows qualified expenses (box 1) of $8000. Box 5 shows $10000 in scholarship. $8k of this scholarship can ONLY go towards tuition; the other $2k can be used for room and board. I understand that the 'extra' $2k must be taxed. For purposes of the American Opportunity Credit, can I tax the 2K (by entering as income) AND reduce box 5 to $8k AND then still claim that I used $2k OF THAT 8K for room and board? Or is this double-dipping the benefit?? I think it is, but I'm not sure. I have looked at this so much my brain is fuzzy. All publications for the AOC use examples that have grants/scholarships only equal to or less than the cost of tuition. In my case, I have more, and I don't see any examples that fit. Does this mean I can't qualify for the AOC, because the 8k must go straight to tuition (and can't qualify since it's already not taxed) and the 2k is taxed already (and technically it was the 2k that pd for room and board, NOT any of the 8k LEFT in Box 5)? I am not even sure my question will make sense to the faint of heart. I need an EXPERT answer that can see through my brain fog. Please don't answer unless you are PRO! 🙂

Not A Product Question

Hal_Al

Employee

Bottom line: your only chance of claiming the AOC is if you have REQUIRED book and computer expenditures.

Even then you need to decide whether to use those cost for the AOC or reduce the taxable amount of the remaining $2000 scholarship.

Yes, this mean you can't use any of the tuition expense ($8000* in box 1), for the AOC, because 8k of the scholarship must go straight to tuition. You are not allowed to call any of that first $8K, of scholarship, taxable*.

If some of the $8000, in box 1, is fees, rather than tuition, you may be able to count them toward the AOC, depending on the wording of the scholarship restriction.