Hi Marilyn, thanks for your prompt response. You wrote:
If you report as @Hal_Al suggests and add the taxable amount of Scholarship Income to the student's return while you claim 4K in Education Expenses, it's true that you may receive the $2000 AOC, but look at the bottom line in both returns to see what works best for you and how you feel about changing numbers on the 1098-T to report to the IRS to qualify for a credit.
Definitely I would be uncomfortable, and I am just trying to avoid a blunder on my declaration or hers.
You also wrote: If you decide to report the 1098-T as issued, since you wouldn't qualify for AOC (and only a $500 Dependent Credit), plus taxable scholarship income, you could consider letting your student file as independent and not report any education expenses. With a $12,950 Standard Deduction, her tax burden would be minimal.
I had considered that, let her file as independent since she made 16k during the year (and her financial aid 8950, 6513 tuition, 3000 room and board and 600 other expenses like computer/tablet), but she is in on my 1095-A, so I think she needs to be on my report. Also she worked initially to gather some money for college (before college start) and she is not working now (at least not enough to meet the minimum income next year). Could I just not include her 1098-T on my report, and include it as it is on hers? Since I am not claiming AOC, would it be bad if the 1098-T is on both reports?
