Q. "As parents, we did use his 1098T when filling out our taxes with Turbo Tax. We did get a American Opportunity credit (AOTC) for our two students that are in college. It is difficult to say if it was for this student or the other student, who we have to pay for tuition for."
A. If you entered both of their 1098-Ts, you got the credit for both of them. Review form 8863, for details. If you used the maximum $4000 of tuition to claim the credit, for him, then $2900 (4000 - 1100 = 2900) of his grant would be taxable to him.
If the conditions of the DESE grant specify that the money can only be used for tuition, then you are not allowed to reallocate $2900 of tuition from the grant to the AOTC. You would have to recalculate your AOTC based only on $1100, but then none of the grant would be taxable on his return.
In his interview, in the educational expenses section, you should reach a screen called "Amount used to calculate education credit". Verify the amount you want to use or change it.
To get back to that screen, Go through the entire education interview until you reach a screen titled "Your Education Expenses Summary". Click edit next to the student's name. That should take you to a screen “Here’s your Education Summary”. Click edit next to “Education Information”. When you get to the screen titled “Amount Used to Calculate Education Credit”, verify the amount you want to use or change it.
