@AmyC that only works if the scholarships are "unrestricted". if Box 5 is only $800 more than Box 1, there is not enough information to come to a conclusion that the parent can use $4000 for the AOTC credit.
The Box 5 scholarships that are "restricted" MUST be netted against the related Box 1 expenses.
THEN, the remaining scholarships that are "unrestricted" CAN BE netted against the remaining Box 1 expenses.
Example:
1) Box 1 = $10,000
2) Box 5 = Unrestricted Scholarships: $3000; Restricted Scholarships: $8,000.
The Restricted Scholarships MUST be netted against the QEE (Box 1)
That means what remains is $2000 of QEE (box 1) and $3000 of scholarships (box 5).
The parents could only claim $2000 of QEE for AOTC, leaving the child with $3000 of scholarship income to report. So just because Box 5 exceeds Box 1 does not necessarily lead to a conclusion that the parents can use $4000 of QEE for AOTC.
The Link to the IRS material (but who is going to take the time to read the linked PowerPoint?????) certainly explains this concept, but I do not see where your response highlights this for the reader.
