okay, let me summarize to be sure I have this correct
1) your son is your dependent
2) On the 1098T, Box 1 is $20,000 and Box 5 is $4,000
3) on the sum of the two 1099Qs, Box 1 is $30,000 and Box 2 is $15,000
A) since your son is your dependent, the 1098T must go on YOUR return. YOU are eligible for AOTC; he is not. Dependents are never eligible for AOTC. Once you post the 1098T, you should see the AOTC credit.
B) the net expense on the 1098T is $16,000 (Box 1 - Box 5). Of that $4,000 is consumed to get the AOTC credit of $2500 (IRS math, look at form 8962 for details), leaving $12,000 of net expense
C) The 1st 1099Q that went straight to the school should list your son's social security number. What about the 2nd one, whose social security number is on there (for the moment, let's assume your son's).
D) The 1099Q distributions were for $30,000 (Box 1) and there is still $12,000 of expense from B) remaining. That means you'll need to document $18,000 of expenses that are NOT on the 1098T to justify the distributions.
E) Room and Board is $10,000. How much was books that were not included in the 1098T? how much were computer expenses? What does all that add up to? If it adds up to at least $18,000, then there is no need for your son to report the 1099Q on HIS tax return. Just make good notes to document how everything adds together and store away in case the IRS ever comes knocking. If it all does NOT add up to $18,000, then the difference remaining is taxable TO YOUR SON (because I assume his social security number is on both 1099Qs) and must go on his tax return (*). But not to worry, if his income is low enough (below $12,200), there is no tax to be paid in any event.
(*) when I mean the rest is taxable, I mean a percent of Box 2. Let's say you only have $15,000 of expenses, subtracting from $18,000 which means $3,000 of the distribution of $30,000 wasn't required. Since 10% wasn't required, then 10% of the Box 2 earnings of $15,000 or $1500 is taxable on your son's tax return.
any questions?
