Wow! Thanks, Hal_Al! So appreicate you taking the time for detailed explanation.
I will follow your directions exactly for entering T-1098 info on my return and on my son’s.
Apologies if I am obtuse with these two follow-up clarification questions.
1a) So, I think I get it:
Basically, I (parent) simply add $4000 to whatever the taxable portion of scholarship would be and pay the unearned income tax ramifications of that extra $4000 on dependent’s return so I can take the AOTC on my return.
(I had been interpreting the T-1098 as document to transcribe literally, box for box)
1b) Yet I’m still struggling to fathom the “why” the workaround works.
Is it that I’m essentially volunteering to pay more tax on my son’s return in order to claim that AOTC on my return?
If so, I’m still not clear how / why it’s legit for tax purposes to claim the AOTC when I did not actually pay the university $4000 of qualified expenses, since most were covered by his scholarship?
I trust your guidance. I’ve read many of your posts and am convinced you are the guru of this topic! Yet I have to understand the “why” in order to feel ok using the workaround and claiming the credit.
2) If my son also has approx. $8000 of earned income (W-2 or NEC),
Does additional earned income impact the workaround?
Thanks, again, for your most kind and generous help, Hal_Al!
