Scholarship exceeds tuition: How to allocate it? Can anyone take the education credit?

[FrustratedMom]

I'm having real difficulty with this issue and would appreciate any advice.

My daughter graduated last year and got a full-time job (yay).  We did the worksheet and believe that we can still claim her as a dependent for last year, as we provided more than 1/2 of her support, but she is filing taxes on her income.

Her scholarship exceeded her qualified tuition and related expenses on Form 1098T by over $3000.  However, her university scholarship covered not only tuition, but also a portion of room and board.  

There were also some books and other qualified expenses of a few hundred dollars that we paid out of pocket.

My questions are:

1) I understand that any excess income she must declare on her taxes, even if she is our dependent.   This would be more advantageous since she is in a lower tax bracket.  But the instructions list a way of allocating the scholarship between education expenses and room and board to maximize the tax advantage that I don't completely understand.  How can I do that exactly?  

2)  Can either of us take the education credit?  Who?  How?    

Thank you.

[Hal_Al]

For you first question, see the answers at:

https://ttlc.intuit.com/community/college-education/discussion/re-simple-answer-yes-since-your-grant...

https://ttlc.intuit.com/community/college-education/discussion/scholarship-exceeds-tuition-how-to-al...

Room & board are not qualified expenses. So, you do not need to "allocate" to R&B.  You allocate to tuition or "not tuition".  How to do that is described at the answers in those links.  

No, anyone cannot claim the credit.  The education credit goes with the dependency. If you claim her as a dependent, only you can claim the credit. if she claims herself, only she can claim the credit.  It doesn't matter who actually paid the education expenses.including books.  By the way, thanks to the new tax law, she pays the same tax whether you claim her or not (not counting the credit).