I have a child who started college for the first time in the 2023 fall semester. Tuition and fees are paid by a combination of cash out of pocket and tax free scholarship.
I am concerned my 2023 return's AOTC numbers were incorrect thanks to the spring semester scholarship funds posting in January 2024 while our cash out of pocket portion was paid in December 2023.
Due to this timing difference, Box 1 of the 1098-T for tax year 2023 equals the cash we paid for both Fall 2023 and Spring 2024 plus only the fall semester's scholarship funds (grand total $8,235.01). Box 5 shows scholarship funds for only the fall semester, $3,931.49.
Since this is all new to me, I just entered the 1098-T without adjustments in TT. This resulted in getting the maximum AOTC credit because the adjusted qualified education expenses on line 27 of Form 8863 were $4,000.00.
Actual expenses paid/scholarships received in 2023:
Cash paid in July 2023 for fall 2023 semester: $2,263.51
Cash paid in Dec. 2023 for spring 2024 semester: $2,040.01
Scholarship funds for fall 2023 semester, received Aug. 2023: $3,931.49
2023 Form 1098-T:
Box 1: $8,235.01
Box 5: $3,931.49
Box 7 is checked to indicate that box 1 includes amounts for an academic period beginning January - March 2024.
Box 8 is checked to indicate the student is at least half-time
No other boxes or checkboxes are filled in.
2023 Form 8863:
Part I, line 8: $1,000.00
Part II, line 19: $1,500.00
The Spring 2024 scholarship funding equaled $3,931.49 and was posted in January 2024.
Questions:
1. Is my 2023 Form 8863 return wrong? If yes, exactly what adjustments were needed? (e.g., reduce box 1; change box 5; check some other box?)
2. Should I file an amended 2023 return to correct it?
3. How do I handle 2024's Form 8863? Will adjustments to Box 1 and/or Box 5 be needed due to whatever the answer is for tax year 2023?
* In tax year 2024, I expect the same timing of fees paid and scholarship funding. This means fall 2024 fees for the same child will be paid in August with scholarship funds posting at the same time. However, spring 2025's cash out of pocket fees will be paid in December 2024 while the scholarship funds will post in January 2025.
Please note I've searched the community before posting. The closest discussion I found was this one. However, the answers and recommendations in that thread are not clear enough to me so I don't know what I need to do for my situation. Thanks so much for any help or guidance. I wish this were easier!
