Thank you so much for your comprehensive response. I really appreciate you taking the time to explain. I don’t think we are able to take the AOTC in 2024 due to the fact that he had a taxable scholarship of about $29k. I have filled out the info, please see below.
I also have a related question. We have claimed our Son (under 24 and a full-time student) as our dependent in our 2024 return. He received a full scholarship in 2024 that paid for his tuition, fees, room and board, etc. According to IRS, a taxpayer needs to provide more than half of living expenses/financial support of a qualifying child in order to claim them as a dependent. My understanding is that taxable scholarships are “unearned income” and as such they do NOT count when determining if your qualifying child can financially support themselves. As such, is it correct that we claimed him as our dependent on our return and he stated on his return that he is a dependent of someone else?
Information:
- Are you the student or parent. Parent
- Is the student the parent's dependent. Yes
- Box 1 of the 1098-T -$60k
- box 5 of the 1098-T - $90k
- Any other scholarships not shown in box 5 - No
- Does box 5 include any of the 529/ESA plan payments (it should not) – No, 529 was paid to me (parent) directly in 2024
- Is any of the Scholarship restricted; i.e. it must be used for tuition – No. The college received various scholarships (merit/finaid/grants) and charged various expenses (tuition, room and board, fees, insurance, etc.) against them. I don’t believe there are any restrictions.
- Box 1 of the 1099-Q - $2,400
- Box 2 of the 1099-Q - $700
- Who’s name and SS# are on the 1099-Q, parent or student (who’s the “recipient”)? - Parent
- Room & board paid. $20k (NOT in box 1 of Form 1098-T)
- Other qualified expenses not included in box 1 of the 1098-T, e.g. books & computers - $1k (I have already accounted for this in the $29k above)
- How much taxable income does the student have, from what sources – W-2: $6k; 1099misc: $10k (internship) and his taxable scholarship
- Are you trying to claim the tuition credit (are you eligible, income not too high)? Income wise we are not high, but TT says we are not eligible for the credit due to his taxable scholarship. We had partial AOTC in the last couple of years since he had smaller scholarships which were not taxable. However, in 2024 some of his scholarships are taxable.
- Is the student an undergrad or grad student? Undergrad
- Is the student a degree candidate attending school half time or more? Yes
