Thank you for the reply. The scholarship awarded in January 2025 was a tuition scholarship, so it could actually make a difference if the IRS requires us to reduce the amount of 2024 QEE by the amount of the scholarship. I'm not sure how the school's 1098-t that will be issued in 2026 will document this situation, however. Maybe the $6K tuition scholarship might simply be listed with the 2025 scholarship total since the scholarship was actually awarded in 2025 for a term beginning in Jan 2025? Maybe it doesn't matter since there were additional expenses paid in 2024 (required fees of $1600 paid in 2024 that were not covered by scholarship, as well as books, laptop, and other supplies that qualify as QEE.)
Regardless, I'm thinking that the phrasing of the IRS tip in publication 970, implies that we could choose to reduce our QEE for 2025 instead of 2024, unless I am misreading this section.
"If you pay qualified education expenses in both 2024 and 2025 for an academic period that begins in the first 3 months of 2025 and you receive tax-free educational assistance, or a refund, as described above, you may choose to reduce your qualified education expenses for 2025 instead of reducing your expenses for 2024."
Am I understanding the IRS tip correctly that we can choose whether to reduce QEE in 2024 or 2025 in this situation? If so, I think we will go ahead and claim the full AOTC for 2024. If not, we will go ahead and reduce the QEE by $6K for 2024, which will still leave us eligible for a partial AOTC.
