Yes-so I was able to work through the screens for my niece and added in an allocation of her scholarship money to living expenses that were not restricted to tuition. The 1098-t was reported on my niece's return. It appears that in order to get the aotc on my sister-in-laws return, I still had to add in information from my niece's 1098-t on that return as well. The box that was used to report the amount that we allocated to living expenses on her parents return seems to believe there should be a W-2 or 1099-Misc to report this amount as income? I put the same allocation amount in the parents as in the nieces, and it provided the amount of the aotc. With some adjustment of the allocation, all within what she was allowed to allocate, I was able find the sweet spot for the maximum credit for the parent with the least amount of tax impact for the niece. Hopefully, I thought this through correctly?
