I am trying to claim the American Opportunity Tax Credit. In 2018 I completed my 4-year degree. I have not been a dependent on any other return for 2 years. I received a scholarship for tuition, room, and board. I also withdrew my 529 plan balance since this was the last year I could do so using the receipt of scholarships as the reason to avoid paying a penalty. Presently TurboTax says I do not qualify because
- Scholarships, grants, and other tax free assistance exceed the education expenses
- Qualified Tuition Program distributions exceed the education expenses
- There were no net qualified education expenses
I understand that I will need to pay taxes on more of my scholarship and QTP distributions in order have educational expenses that can be used to qualify for the AOTC. My question is: How do I adjust where educational expenses get allocated in order to make enough of my scholarship and QTP distributions taxable so I qualify to claim the AOTC?
