We will be claiming our 19-year-old son as a dependent on our tax return. He has a 1098T with $4,947 in box 1 and $10,249 as scholarships in box 5. In order to maximize our AOTC on OUR return, I'm assuming he needs to claim some of the amount in box 5 as income on his own tax return. Since we already meet the $4,000 expense threshold in box 1, I'm assuming we don't want to choose the "allocate" option that I've read about in these conversations, since we already meet it with box 1. Since his scholarships exceeded his qualified expenses, should he claim the difference between $10,249 and $4,000 (the threshold for AOTC) as income? Or the difference between box 1 ($4,947) and box 5 as income? Or the whole amount of his scholarship? Or some other scenario? Obviously I'm wondering how best to reduce the "overpayment" in box 5 so that we can qualify for the AOTC. Thanks!
