I followed the advice of the Tax Expert who graciously posted in regard to possibly allocating scholarship money not designated for tuition and fees to housing. This has increased my niece's taxable income, but also provided an opportunity to claim the AOTC on her mother's tax form. I am sorry, but I am not as familiar with how to do this on TurboTax as you and the other millions that you refer to apparently are. That was why I was asking-so that I was following the correct procedure. The IRS itself suggests the procedure of allocating scholarships or grants to non-qualified expenses that might be enable families to increase the amount of the AOTC in Chapter 2 of Publication 970. I am well aware of what non-qualified expenses would be and what QHEE are. I am simply looking for advice on how to do things the right way with the software to avoid any issues and to maximize the legal educational tax benefits.
