Room and board charges paid to a college or university are neither tax deductible nor are they qualifying education expenses for purposes of the American Opportunity Tax Credit or the Lifetime Learning Credit.
Amounts reported in Box 1 and Box 2 of Form 1098-T should include only qualifying tuition and fees, not room and board charges. If your daughter received a combination of financial aid that exceeded the tuition and fees, record the amount from Box 5 in TurboTax, then continue in the Easy Step interview to carefully answer all the questions about how that money was used. This will result in you getting the correct tax credit and avoiding having any of the scholarship classified as taxable income. For more information, please refer to Why
Is My Scholarship Taxable?
