There is no line 17A on the Student Info Worksheet. There is a line 17 with several un-numbered (and un-lettered) columns. TurboTax (TT) should fill in the boxes on line 17. If it fails to do so, you can manually enter them (with TT desktop, not online). You enter $4000 for the AOTC.
On your return, the simple thing to do is enter only the 1098-T. Do not enter the 1099-Q*. You will use $8000 of expenses to offset the 1099-Q, so that none, of the box 2 amount is taxable.
On your student's return, you reduce the expenses he enters by $8000 (don't reduce by an additional $4000, the program accounts for the $4000 used for the AOTC claimed by the parents**.
Q. Is there any advantage to take them under student's versus parents tax ID?
A. Yes. That puts the taxable portion on the student's return, rather that the parents. That USUALLY results in lower tax for the family, because, even with the kiddie tax, some of the income is taxed at the child's tax rate
*You can just not report the 1099-Q, at all, if your student-beneficiary has sufficient educational expenses, including room & board, to cover the distribution. When the box 1 amount on form 1099-Q is fully covered by expenses, TurboTax will enter nothing about the 1099-Q on the actual tax forms. But, it will prepare a 1099-Q worksheet for your records.
On form 1099-Q, instructions to the recipient reads: "Nontaxable distributions from CESAs and QTPs are not required to be reported on your income tax return. You must determine the taxability of any distribution."
** In his interview, you should eventually reach a screen called "Amount used to calculate education deduction or credit" Be sure the amount in that box is $4000. Be advised some people are saying they're not getting the "Amount used to claim the tuition deduction or credit" screen on the dependent’s . The alternate workaround is to enter $4000 less ($12,000 less total in your case) expenses.
