Scholarship is a tax-free amount paid to a student enrolled at higher educational institution for a purpose of getting a degree or diploma. The scholarship must be used to pay for tuition, books, lab fees, and related fees. If the total, scholarship received was more than the tuition paid or financed, a portion of it may be taxable.
The retirement withdrawal is fully taxable on your income tax return.
If you're claiming AOTC, your adjusted grosss income can not exceed $139,000 for married joint and $69,000 (all others). Even though, the tuition paid was more than the scholarship received, you may not qualify to claim AOTC because of the AGI. Your daughter may not qualify for American Opportunity Credit as well, if she's been claimed on someone's return. She doesn't need to enter 1098-T on her income tax return
Education expenses includes:
- Tuition fees
- Lab Fees
- Graduation fees
- Equiptments and school supplies
- used such as computer and other
Note: Room and board are not deductible expenses.
