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AOTC help needed to verify I am doing this right please

Forum|Forum|1 year ago
March 23, 2025
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@Hal_Al
Hello,
If possible could you please give your input if I have done this correctly to claim the AOTC?

I am trying to claim the AOTC credit for my student that is in their second year of college.
Our 1098 T info:
BOX 1: $37,019.95
BOX 5: $44,085.00

Student at least half time: X
[The rest of the blanks on the form are empty.]

QEE (books): $128
Room & Board amounts for the 2024: $9,806
Scholarship Amount restricted to Tuition ONLY: $34,650

Can we allocate $9,435 of his scholarship money (the difference left after deducting the tuition only scholarship) to his room & board and claim that for my students income? (They earned $2,400 over summer with an on campus job, they received a W2 for this job and that was their only income - so even with the $9,435 that's not enough for them to be required to file their taxes, correct?)

This gives me the following:
Education Credit $1,275

Refundable American Opportunity Credit $850

For a total of $2,125

Does this look correct? Or do I need to do something differently?
Thank you in advance.

Best answer by Hal_Al

Q. Does this look correct?

A. Yes, you got it exactly right.

Q. They earned $2,400 over summer with an on campus job, they received a W2 for this job and that was their only income - so even with the $9,435 that's not enough for them to be required to file their taxes, correct?

A. Correct. That totals less than $14,600, so their standard deduction* will cover the total income. You may want to have them file anyway just to document the reporting of the scholarship as income.

For others reading this: even if his actual room & board had been less than $9,435, he could still claim that much as taxable scholarship to allow the parents to maximize the AOTC. Note the wording at that screen “or other expenses”. You didn’t have to literally use the scholarship for R&B.

*Scholarships are a hybrid between earned and unearned income. It is earned income for purposes of the $14,600 filing requirement (2024) and the dependent standard deduction calculation (earned income + $450). It is not earned income for the kiddie tax and other purposes (e.g. EIC). For grad students and post grad fellows, scholarship, stipend and fellowship income is earned income ("compensation") for IRA contributions. Taxable scholarship goes on line 8r of Schedule 1

Hal_AlAnswer

Employee

Q. Does this look correct?

A. Yes, you got it exactly right.

Q. They earned $2,400 over summer with an on campus job, they received a W2 for this job and that was their only income - so even with the $9,435 that's not enough for them to be required to file their taxes, correct?

A. Correct. That totals less than $14,600, so their standard deduction* will cover the total income. You may want to have them file anyway just to document the reporting of the scholarship as income.

For others reading this: even if his actual room & board had been less than $9,435, he could still claim that much as taxable scholarship to allow the parents to maximize the AOTC. Note the wording at that screen “or other expenses”. You didn’t have to literally use the scholarship for R&B.

*Scholarships are a hybrid between earned and unearned income. It is earned income for purposes of the $14,600 filing requirement (2024) and the dependent standard deduction calculation (earned income + $450). It is not earned income for the kiddie tax and other purposes (e.g. EIC). For grad students and post grad fellows, scholarship, stipend and fellowship income is earned income ("compensation") for IRA contributions. Taxable scholarship goes on line 8r of Schedule 1

M

MidMoMom24Author

@Hal_Al

Thank you so much! You were so helpful last year (I took 6 pages of notes from your advice last year, with great detail in hopes I would get it right this year) and I am confident that is the reason I did get it right 🙂

I really appreciate you taking the time to go thru this for me. I will also go thru and do my students taxes and see how that goes. Should I submit even if there is no amount due or owed? Just to have a record of this amount as their income with the IRS? (Just making sure I followed you right).

Thanks again! 🙂

Hal_Al

Employee

Q. Should I submit even if there is no amount due or owed? Just to have a record of this amount as their income with the IRS?

A. Yes, but it's optional. There's not evidence yet that it's actually helpful. I would do it if there is no cost involved (e.g. you don't have to pay another TurboTax fee to file).