Im wondering how to include the Pell Grant as taxable income and how it should look on my 1098t. The 1098t lists half my total Pell Grant in box 5 ($3223). Box 1 of 1098t says I had $3176 in qualified tuition related expenses. As far as I know, currently the IRS allows you to use some or all of your Pell Grant as taxable income, in order to claim a larger AOTC credit. So how would I go about doing this?
Would I just subtract $2500 from box 5 of the 1098t, and then put $2500 as taxable income with SCH in the description box on the "Income" portion of turbotax?
So on turbo tax it would look like this: Box 1 ($3176), Box 5 ($723). Then my income would increase by $2500, however it would allow me to have the full AOTC credit, therefor offsetting the additional taxes? If I put the 1098t exactly how the college sent it, then I only receive about $763 of the AOTC credit. However multiple sources say that if you receive full pell then you should be able to receive full AOTC as well (or at least maximize it). My total income for the year was about 7k so I'm definitely under the standard deduction margin.
