Scholarships Used for Room and Board

Forum|Forum|2 years ago
April 18, 2023
2 replies
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I am a student who received 35k in scholarships (1098-T box 55) and had 28k in tuition (box 1). I spent 11k on room and board with the school.

Can I designate the use of my scholarships to my room and board (taxable) first and then to my tuition (not taxable) so I can claim the American Opportunity Credit or do my scholarships have to go qualified expenses first?

The difference is $1,700 in a refund for me.

Vanessa A

Yes, you can absolutely do that. However, if you are claimed as a dependent on someone else's return, you cannot get the refundable portion of the AOTC, so be sure you have answered all questions accurately such as if you are eligible to be claimed as a dependent.

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ICRegalAuthor

Thank you for the quick answer.

I am not claimed by my parents. Thank you for pointing that as a potential impact.

Hal_Al

Employee

Yes, you have that option, to allocate the scholarship to room and board (unless the terms of the grant say it must be used for tuition).

So, you may want to allocate even more to room and board, to get a bigger AOTC.

When asked if any of the scholarship was used for room and board, answer yes. Then enter the amount you want to be taxable, in the pop up box. R&B are not "qualified educational expenses". So, this is how you tell TT that it is taxable. Note the wording at that screen “or other expenses”. You didn’t have to literally use the scholarship for R&B. This will put it on line 8r of Schedule 1 (this line is new for 2022). You are simply allocating it away from tuition.

If you are your parent's dependent, you can use this same technique, to allow them to claim the AOTC, on their return, while you report the scholarship as income on your return.