The first step is to determine if you qualify for credit, You cannot claim the credit if your MAGI is over $90,000 ($180,000 for joint filers).
- If you don't qualify, enter the 1098-T as it is on the student return, do not enter on parent's return.
- If you do qualify, take $4,000 for education expenses. We can give you a long complicated process of entering both forms on your return but we have finally figured out a quick and easy shortcut.
- For the parent, enter the 1098-T with no scholarship income and just claim $4,000 of tuition needed.
- For the child, enter the 1098-T- box 1 already had $4000 used so minus the $4000 from box 1 and fill in everything else.
Note, most scholarships are not restricted but if you have restricted scholarships that must be used for tuition, they have to be entered as such.
See What You Need to Know about AOTC and LLC and how scholarships and tax credits interact.
[Edited 4/11/25 | 1:54 PST]
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