@Carl you can get a tax credit when all is covered by scholarship or 1099Q (not sent direct to college). Assume all is covered but you make $4k of the scholarship (if allowed by the rules of the scholarship) or 1099Q income, parent gets AOTC and student pays no tax due to standard deduction. yes the student has to file but, it is a win/win situation. The 1099Q is not actually reported nor required to be (just the portion not used for qualified education), you just report the excess when the parents return is done TT will tell them the amount reportable as income to the student. TT makes it confusing but you only can get tax credits if you use taxable income and since you made the scholarship taxable (say for room & board), it is usable. The student enters the amount as scholarship used for room & board with no education expenses and depending on if they have other income, no tax liability, it properly reports it on the student return with SCH....
**I don't work for TT. Just trying to help. All the best.
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**Mark the post that answers your question by clicking on "Mark as Best Answer" I am NOT an expert and you should confirm with a tax expert.
