Yes, you are correct. You have the right to split tuition as you proposed. The 1098-T will be entered on your return. You will use $4,000 of tuition on your return to get the maximum American Opportunity credit of $2,500.
The remaining tuition of $3590 plus room and board plus books and equipment expenses will be used to cover the 1099-Q. Any excess withdrawals will be subject to tax and penalty.
This is absolutely legal and is the most tax efficient solution.
@NCperson
Edited 2/20/2020 | 7:48 PM
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