No, not necessarily regarding the tuition being allocated to 2018--this exception would apply to your son's situation, too. This is assuming that the total tuition less scholarships was greater than the $4,000 of education expenses for 2018 that would have resulted in the 2018 American Opportunity Tax Credit. The amounts spent for tuition for the spring term would likely be unused.
If that is true in your scenario, then the tuition for the Spring could be used in 2019 even though it was paid in 2018.
Please see IRS Publication 970, Table 2.1 page 15 that states "If you pay qualified education expenses in both 2019 and 2020 for an academic period that begins in the first 3 months of 2020 and you receive tax-free educational assistance, or a refund, as described above, you may choose to reduce your qualified education expenses for 2020 instead of reducing your expenses for 2019." Please note this is contradicted earlier on page 14.
Your questions:
1. Yes, you can use non-qualified education expenses.
page 16 of Publication 970 "Coordination with Pell grants and other scholarships. You may be able to increase your American opportunity credit when the student (you, your spouse, or your dependent) includes certain scholarships or fellowship grants in the student's gross income. Your credit may increase only if the amount of the student's qualified education expenses minus the total amount of scholarships and fellowship grants is less than $4,000. If this situation applies, consider including some or all of the scholarship or fellowship grant in the student's income in order to treat the included amount as paying nonqualified expenses instead of qualified education expenses. Nonqualified expenses are expenses such as room and board that aren't qualified education expenses such as tuition and related fees. Scholarships and fellowship grants that the student includes in income don't reduce the student's qualified education expenses available to figure your American opportunity credit. Thus, including enough scholarship or fellowship grant in the student's income to report up to $4,000 in qualified education expenses for your American opportunity credit may increase the credit by enough to increase your tax refund or reduce the amount of tax you owe even considering any increased tax liability from the additional income."
2. Use a spreadsheet to document your treatment of expenses and save for your records with the tax returns.
3. Unfortunately, we cannot see your tax return in this forum. However, you are welcome to call in and either ask a question or submit for an offline review to confirm your entries. I recommend citing the Publication and page number in the initial correspondence
4. No. The steps are outlined by the IRS
5. During the interview process in entering the 1098-T, a series of questions are asked. When it is complete, you will have a section entitled Here's Your Education Summary. During the interview and after there will be timing questions and dollar amount questions to capture the details you are asking about.
Also, here are some tips for Form 1098-T entering from TurboTax Expert KittyM:
STEP 1.) It will skip to books and supplies. KEEP GOING. You can't jump to, you can't hit back KEEP GOING as though you have entered.
STEP 2.) Do NOT put in scholarship amounts when it asks if the scholarship is listed on Box 5 of the 1098-T because you are about to double up. KEEP Going. you are about to circle back.
STEP 3.) Go through all screens. If says can't maximize because no expenses do not fret, Go all the way until it circles back to the Wages and Income screen.
STEP 4.) Go back into Education credit and hit Edit on the student. Will ask if you had education credit.
STEP 5) Once you do you may see the Summary Page of the student. Hit edit on the top one that reads Tuition.
Step 6.) Will ask if you had a 1098-T you say yes, and THERE is the 1098-T
