If My dependent student didn't receive a 1098-T due to scholarship can I still claim AOTC

[colleenroden4]

My daughter didn't receive a 1098-T because her scholarship is greater than the tuition;  Her 2021 tuition was 8250 and she received a scholarship that covered the tuition and also received a monthly amount to cover room and board for $10350 and an additional $500 to cover misc expenses.  We also bought a new computer for 1650.  She also received 5150 as a beneficiary of a 529.  We did not write a check for the 8250 tuition but did write checks for the room, board and computer.  Can I still take $4000 of the scholarship and add it to my return for the AOTC credit even though she didn't get the 1098-T.  The formula I saw in another post made me think I could allocate the $5150 529 first, then $4000 on my return for the AOTC credit, then the rest would be considered taxable income on her return, but in the examples the person received a 1098-T and I then saw some other posts about having to have a 1098-T and write checks for the tuition to be able to claim the AOTC.

[Hal_Al]

Yes you can do that (claim the AOTC, allocate some expenses to the 529 distribution and have her declare some scholarship as taxable income). 

When asked if you got a 1098-T, say no, but say yes (check the box) to the question do you qualify for an exception.  That will get you the boxes to enter the expenses.

Be forewarned, it gets complicated. 

[colleenroden4]

Good Morning,

I believe I understand technically how to do it and had it all entered and ready to go, my question was if it is actually allowable to do that since she didn't receive the 1098-T and that the tuition wasn't paid by check/cash, but other expenses were such as room and board.

[Hal_Al]

Q. Is it  actually allowable to do that since she didn't receive the 1098-T?

A.  Yes. That's why the exception question is there, in TT.

A form 1098-T was made a requirement for the education credits a couple of years ago.  However, if you qualify for an exception, you may still claim the AOC, without a 1098-T.  If you attended an eligible institution, you most likely qualify for an exception. 

 “However, a taxpayer may claim one of these education
benefits if the student doesn’t receive a Form 1098-T because
the student’s educational institution isn’t required to send a
Form 1098-T to the student under existing rules (for example, if
the student is a nonresident alien, has qualified education
expenses paid entirely with scholarships, or has qualified
education expenses paid under a formal billing arrangement). If a
student’s educational institution isn’t required to provide a Form
1098-T to the student, a taxpayer may claim one of these
education benefits without a Form 1098-T if the taxpayer
otherwise qualifies, can demonstrate that the taxpayer (or a
dependent) was enrolled at an eligible educational institution,
and can substantiate the payment of qualified tuition and related
expenses.”  https://www.irs.gov/pub/irs-pdf/f8917.pdf

[colleenroden4]

Thank you for your help