I would like to understand if I am doing something correctly. I’ll describe the situation using a simplified example. The issue is that my child’s school provided a scholarship for the 2018-2019 academic year, divided equally between both semesters but chose to include one half of the scholarship in the 2018 1098-T and the other half in the 2019 1098-T. As I paid for both semesters in 2018, and took the AOTC in the 2018 tax year, I am now left with a 1098-T for 2019 without a corresponding expense.
Thus, in my simplified example:
Qualified Education Expenses for fall 2018 and spring 2019: $50,000
Scholarship (for the academic year): $30, 000
Amount billed and paid in 2018: $20,000
1098-T for 2018 shows: Box 1: 20,000; Box 5: 15,000
1098-T for 2019 shows: Box 1: 0; Box 5: 15,000
My child transferred to a state school in fall 2019 without any scholarship, and we have a 1098-T from that school also. However, the 1098-T from the first school discussed above with a $15,000 scholarship messes up the AOTC calculation and gives us no AOTC for 2019. In fact, my child will have an added income arising from that.
I redid my 2018 taxes including the 30,000 scholarship and find that I am still eligible for the AOTC. However, my child has some extra income ~$1500 for 2018. (The child did not file in 2018 as there was no income.)
Would I be OK if I included this extra income from 2018 in the child's 2019 tax filing? I would like to know if this is possible and a proper way to avail of the 2019 AOTC while staying in compliance with any tax rules.
Thanks in advance.
