Hi. I have two students in their first 4 years of college and we meet the income limits for the AOTC. I am trying to figure out how to maximize the credit. I believe I will need to have my students file a portion of the scholarship and grant funds as income on their own tax return. I claim them as dependents and would like to receive the full 1K refundable AOTC and 1.5K nonrefundable amount for each of the students.
The 1098T was provided by the university as follows:
Student 1 - box 1 $7828, box 5- $7255
Student 2- box 1 $5609, box 5- $2400
In addition, a new laptop was purchased for each student ($800 and $1100) during 2024. I don't understand how to include that in the education expense. Likewise, these amounts do not include textbooks/software required for the classes. I wanted a clear connection to the 1098T but that wouldn't be the case if I added those expenses.
The scholarship and grants were partially refunded to student 1 but generally the funds were applied to reduce tuition and fees (no housing costs or textbooks) . There are no specifications on the scholarships or grants about what they must be used for.
My questions are essentially:
1) What amounts for box 5 should I have each of the two students file under their own return to maximize AOTC? Can I include partial amounts from box 5, splitting it between the parent and student returns?
2) How would I include the laptop and textbooks in the box 1 amount? Or is that irrelevant since we exceed 4K per student?
3) Would the box 5 amounts be listed on the student return as SCHOLARSHIP since I don't have a W2/1099?
Thanks in advance for your help.
