Enter only the main school 1098-T, on both your return and his, with modifications. As previously stated, on your return, enter $4000 in box 1 and leave box 5 blank. Enter no other amounts in the TurboTax (TT) interview. That should get you the maximum AOC.
On his return, enter the 1099-Q and complete the 529 distribution interview, before entering the 1098-T. At the 1098-T screen, enter $12,021(11071+413+537) in box 1 and $14,420 in box 5. Enter books ($716) and room & board ($10,400) when asked for books*. When asked how much of the scholarship was used for room and board, enter $11,014**. Say no when asked if he went to another school (you’ve already included those amounts).
You should reach a screen “education expenses used for a tax credit or deduction”. Enter the $4000 you claimed on your return.
I calculate $4694 of the 1099-Q as taxable. TT will show this on the student info worksheet and the 1099-Q worksheet and enter the amount on line 8 of Schedule 1
* To get the screen to enter Room & Board, answer yes when asked if you have book expenses.
**This will be the taxable amount of scholarship and is the number needed to get the full $12,200 standard deduction. Even though, room & board may have actually been paid for with 529 money, you have to enter it this way to get the results you need.
There is a possible additional wrinkle, I had not mentioned earlier. Some of the 529 plan distribution can be subject to the 10% early withdrawal penalty. Having expenses paid by scholarship and/or claiming the AOC offsets this penalty, so I don’t believe it will come up in your case.
