@NCperson - thank you for trying to help!
1098-T Box1=24215.00
Box 5=16650
No other $ in boxes
And yes, it went directly to the college. The 16650 is her annual scholarship directly from the school. I paid the $7590 via 529 for the fall semester. I was late paying for the winter 2020 semester and paid $7590 for that on Jan 2nd -otherwise I'd be seeing a bigger number in box 1 like i did last year (24215 +7590). Not sure what a mess that is going to make next year! BTW, last year I paid all cash for the whole year so had no 529 distributions...and took the full AOTC on my return. Not sure that was the right move in hindsight.
So what I've gathered is that you CANNOT shift funds around from the 1098T between returns. That is, you either decide to put the qualified tuition on the parents form and take the AOTC, or you forgo the AOTC on the parents form and use the 1098T dollars on the child/student return to shelter the distribution. Is that correct???
The earned interest (1099-Q Box 2) of 4618.33 is being added to my daughters 'income'...and because she is over the Standard Deduction on income, that is being taxed at her marginal rate (10%). There is also a 10% penalty being added (461.80). That $923 tax/penalty appears to be the 'cost' of me taking the AOTC on my return. I'm still 'net' $1577 (2500-923).
There were other comments about 'determining the percentage' of unsheltered earnings...and I also read about that in IRS Publication 970. But honestly I was just hoping TurboTax would do all those calculations for me. She also had some books and other expenses I thought I could add to her return directly to help shelter the 4618 but I can't see a way to do that either...almost like ALL the qualified expenses get 'pinned' to the parent return when you go that route.
Thanks again for any additional guidance.
