Daughter is 18 and started her first year of college Fall of 2021 earning her undergraduate degree. I am claiming her as a dependent on my taxes. She needs to file taxes since she worked a summer job and has earned income that has income taxes taken out. On the 1098-T form, box 5 ($11,370) is greater than box 1 ($6330.69) for a difference of $5039.31. She also paid $1900 in books, fees, and equipment out of pocket. I've seen on the discussion boards about the tax "loophole" where the child reports excess scholarship money (that she got refunded by the school) as "taxable income" but then the parent on their return reports $4,000 in order to get the full $2500 AOTC. The amount in box 1 from the 1098-T is the amount of tuition for the school but it's also the amount of a school scholarship awarded to her that could only be used to tuition at the school (basically a 1 year full tuition scholarship from the school). The remaining amount is a private scholarship paid directly to the school but then refunded as money in excess of tuition charges. I'm not sure how to enter all this into Turbo Tax between my return and her return. And does she "qualify" to get the full $2500 from the AOTC?
