Q. If I may ask you to clarify it one more time about AOTC - Even though, we only had $2000 of qualified educational expenses (computer, books) that we (parents) paid out of pocket, TT still takes additional $2000 from the tuition paid (to bring the total of qualified expenses to $4000) in order to calculate maximum credit of $2500. Do i understand it right?
A. Yes.
Q. One of the scholarships she received for academic year 2023-2024 is not reported on 1098-T form - I am assuming because it technically has not been received in 2023, but in early January 2024. So it will eventually be reported by the school on the 2024 1098-T form, is that right?
A. Yes, most likely.
Mismatched years on scholarships is a common problems with school 1098-Ts, Basically, you need to know what's going on and adjust the 1098-T, as/if needed, either this year or next year, or both. If you're saying that some of the tuition in the 2023 box 1 was actually paid by scholarship the school posted in 2024 (and is not shown in the 2023 box 5), then you may need to reduce the amount in box 1 that you enter, in TT*. But, that doesn't sound right with Box 1 already $11,250 and box 5 with $20,629.
*The 1098-T is only an informational document. The numbers on it are not required to be entered onto your tax return. However receipt of a 1098-T frequently means you are either eligible for a tuition credit or possibly your student has taxable scholarship income (or both in your case).
If you claim the tuition credit, you do need to report that you got one or that you qualify for an exception (the TurboTax interview will handle this)
You claim the tuition credit, or report scholarship income, based on your own financial records, not the 1098-T. In the 1098-T screen, click on the link "What if this is not what I paid the school" underneath box 1. You will then be able to enter the actual amounts paid. You will also reach a screen that allows you to adjust the scholarship amount for "amounts not awarded for 2023 expenses".
Or if you find it easier, just change the numbers in boxes 1& 5 to what your records show. The 1098-T that you enter in TT is not sent to the IRS.
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