My situation: Graduated in May 2024 from a private institution and began working full-time in June and supporting myself fully, so no longer a dependent. I received my 1098-T from my school, and Box 1 is $34,579 while Box 5 is $44,709. Total cost of attendance for 2024 was $46,668; I made a total of $1,959 in payments to the school and the scholarships in Box 5 covered the rest. The 1098-T would imply that $10,130 was scholarships used for unqualified educational expenses (e.g., room and board, student medical fees) and thus is taxable income which I would be liable to pay taxes on.
As specified in Publication 970 (see "Example 3," pp. 16-17), I understand it is an option to claim a portion of the scholarship I received in 2024 as Taxable Income, and it may result in an overall increase in the tax refund (or decrease in tax liability) I get. In my case, it seems that the optimal case would be to claim $12,089 ($10,130 + $1,959) of the scholarship as taxable income, which the IRS will assume was used to pay unqualified educational expenses, and the $1,959 I made in payments to the school will count towards the American Opportunity Tax Credit.
I would like to know how, given my 1098-T, I can claim an amount of my scholarship that I specify (in this case $12,089) as taxable income in order to qualify for the American Opportunity Tax Credit in TurboTax. Would I have to ask my institution for a W-2 of this amount and a revised 1098-T? Or is there some other way in the TurboTax platform to do this?
@AmyC I've read some of your posts and you seem to have a lot of knowledge here--I'm hoping you can help me out.
