@tenacjed this subject is QUITE confusing.
Simplied rules:
1) the 1098-T is in your son's name. If Box 5 exceeds Box 1, that difference is taxable income TO YOUR STUDENT. He must report it on his taxes; there is nothing for you to report.
2) if Box 1 exceeds Box 5, that is the basis of the American Opportunitites Tax Credit and goes on YOUR tax return. However, to be eligible for the tax credit, one of the requirements is that you claim your child. There is no deduction; it's only a credit if you are eligible. It would no on YOUR taxes.
3) as stated by others, if you CAN claim your child, it is your decision whether to do so or not. The IRS does not care. But from your child's perspective, he is to answer the question CAN someone claim him, not DID someone claim him. If you can claim your son. but decide not to, he still has to indicate someone can claim him on his tax return. See the difference?
4) if you can claim him and do not claim him, he is able to claim the AOTC tax credit if Box 1 exceeds Box 5. Without going into the details, that is normally very hard for him to do under the rules, but possible. If that is your objective, post back and I will explain why it is unlikely to be viable.
does that help?
