I am phased out of the AOTC credit this year because of a year-end bonus. Is it possible for my daughter to take the credit (she is the student).
She is 20 y/o, I claim her as a dependent, and she makes about $10K per year. She has student loans so she receives a 1098-E, but the interest is deferred so I don't think she has any interest payments to report there. She got a 1098-T with tuition of $14580 and grants of $2350. The 1099-Q lists me as the recipient, not her. Her 529 account (that I pay much of her tuition and rent with) lists me as the account owner and she as the beneficiary. I always pay the full $4K on the first tuition statement so I meet the max qualification for the AOTC (the cash payments portion). She also pays $5K per year towards her tuition with cash. I am willing to not claim her as a dependent and give up the $500 dependent credit that I would receive if she will be able to get a larger AOTC than the dependent credit we get for her now. I just don't know if it's possible that she'll get anything back because as I understand it some of the AOTC is a credit, and some just reduces tax liability back to $0. And because her income is so low, her tax liability is already $0.
Is this a viable solution so we don't lose the credit for the year? Are there certain steps I would need to take to make this happen? I assume I would not claim her as a dependent but anything else? Would it even work because I'm the 529 owner and the recipient on the 1099-Q? We've always gotten the full credit in years past because our expenses always exceed the 529 disbursements by quite a bit, and this year is no different in that respect.
Thank you!
