How should we report fellowship income that is more like a stipend without duty?

[ndc24075]

I have a question regarding the classification of a Ph.D. Dissertation Fellowship for tax purposes. Specifically, I am unsure whether this type of fellowship should be classified as income (on somewhere we don't know) or reported as "Other Scholarships/Grants/Fellowships" when filling out my tax return.

To provide some context, my spouse received a Ph.D. Dissertation Fellowship from her university's graduate college program for the academic year 2022-2023. This fellowship is not for paying school fees, as she is a graduate student and the university does not ask her to pay tuition, although she still needs to pay other fees. The fellowship is actually more than a stipend without any duty. The reason we ask this question is because we realized how it is reported matter a lot for us: we ran an experiment by reporting the fellowship as income on the W-2, which will enable us to claim the American Opportunity Credit. However, when we reported it as "Other Scholarships/Grants/Fellowships," we were not eligible for the credit. The key difference is that the scholarship amount exceeded the allowable school expenses. Then we started to find that in the explaination of "other scholarship", it says: 

"A scholarship or grant is generally money that pays for a student's undergraduate or graduate education.

Enter scholarships and grants that were used to pay for tuition, fees, books, supplies, and equipment, and the student was required to pay the institution for these expenses."

That puzzles us because the fellowship is to support my spouse living when she works on dissertation so we wonder whether we should report it somewhere else.

[xmasbaby0]

You cannot get the American Opportunity Credit for working on a PhD.   The AOC is only available to students pursuing an undergrad degree.  However you may be able to get the Lifetime Learning Credit for graduate study.   The LLC is not refundable---it can reduce your tax liability.

https://ttlc.intuit.com/questions/3262983-who-is-eligible-to-take-the-american-opportunity-tax-credi...

https://ttlc.intuit.com/questions/1901172-what-education-tax-credits-are-available      

https://ttlc.intuit.com/questions/1901526-what-s-the-income-limit-for-the-american-opportunity-and-l...

https://ttlc.intuit.com/community/credits-and-deductions/help/what-expenses-qualify-for-the-lifetime...

[Hal_Al]

I assume  the fellowship/stipend income was not reported to you, on any tax form (1098-T, W-2, 1099).

The way to enter taxable  fellowship/stipend income is in the educational expenses and scholarships section. The interview will ask if you had any scholarships not reported on the 1098-T. Enter there. You will then be asked how much of the scholarship was used for room and board. Enter the taxable amount there. Note the wording at that screen “or other expenses”. You didn’t have to literally use the scholarship for R&B.  This is how you enter it as taxable and get it in the right place on the tax forms, line 8r of Schedule 1 (new location for 2022).

[ndc24075]

But how do I remove the American Opportunity Credit? TurboTax just automatically chooses it and I cannot see anywhere to switch to Lifetime Learning Credit.

[Hal_Al]

Type letme (no space between let & me) in the search box. Then press enter. Then  click  on the link "jump to letme''. 

TT will give you the option to select another tuition  credit or deduction.

If that doesn't work

Type letme (no space between let & me) in the search box. When the dropdown list appears, click on letme rather than "jump to letme'. On the next drop down, click on the "jump to letme” link.

TT will give you the option to select another tuition  credit or deduction.