AOTC Allocation and TurboTax Entry

[Sgiraldo2025]

Hi. I am single, not a dependent, and a full-time student.

My 1098-T shows:

• Box 1 (Qualified Expenses): $57K

• Box 5 (Scholarships/Grants): $76K

I want to allocate $4K from my scholarship to room & board (since my scholarship has no restrictions on this) so I can use the nonrefundable portion of the AOTC. Even after reallocating, my scholarship still exceeds my qualified expenses.

1. Can I still claim the nonrefundable AOTC in this case?

2. How do I report this in TurboTax? Should I:

         • Adjust Box 1 (reduce by $4K)?

         • Adjust Box 5 (reduce by $4K and report it as “Other Scholarship”)?

Thanks!

[KrisD15]

To do what you want to do (get the full American Opportunity Tax Credit) you need to show 4,000 excess education expenses. 

You show 76 scholarships and 57 tuition, that means you show 19,000 in taxable scholarships and no excess education expenses.

You would need to claim 23,000 taxable scholarships in order to have 4,000 excess expenses. 

You can also add books and supplies which are not listed on your 1098-T as expenses. 

If you were ever claimed as a dependent student and that person claimed the American Opportunity Tax Credit using your expenses, that would count against the four time limit you can claim that credit. 

If you don't have Form 1099-Q reporting a savings account distribution, the option of entering Room and Board is not given, the reason being that room and board can offset the tax on a distribution, but not a scholarship. 

Enter the 1098-T into your TurboTax program and go through the entire interview until you get to select "Maximize my tax break"

Deductions & Credits

Education

If it is advantageous to your tax situation, the program will suggest you claim additional scholarships as income to get the education credit. 

If not, type    letme    into the searchbox and click the "jump to   letme"   link.

That screen allows you to change the amount of expenses you want to apply to the credit. 

The max for the American Opportunity Tax Credit is 4,000

The max for the Lifetime Learning Credit is 10,000

Whether it's worth doing depends on your other income and your tax bracket. 

[Sgiraldo2025]

Thank you! I don't have  a1099-Q . I went through the entire interview (Education) and did not see the option "Maximize my tax break".  The software says ¨You can't claim an education tax break,  you may not qualify because:  Somebody else can claim you as a dependent, Scholarships, grants, and other tax free assistance exceed the education expenses,  There were no net qualified education expenses"

I confirmed in the personal interview that I won’t be claimed as a dependent. So,  if my scholarships exceed my qualified expenses, I cannot reallocate part of the excess to non-qualified expenses (like room and board) to claim an education credit? Do the payments have to be greater than the scholarships as a condition to get the AOTC applied?

[ThomasM125 · Accepted solution]

You are correct, the scholarship income used to pay for room and board is taxable to the extent it is more than your education expenses. Your qualifying education expenses do need to be more than your non-taxed scholarship income in order to qualify for an education credit.