Scholarship & American Opportunity Credit

[mwpdx2245]

1.  TT tells me my daughter must file tax return because she received scholarship.  This has never happened before in the previous 2 years of college.  The scholarship is entirely 100% for tuition at her university.  What did I do wrong to flag this instruction?  I did elect to claim book expenses.

2.  What section covers the American Opportunity Tax Credit?  Last year, TT provided, but it's not showing up in my return.  Again, what did I not do to receive this credit?  Daughter is still undergraduate, 3rd year junior, full time. 

[ColeenD3 · Accepted solution]

Was the scholarship more than her education expenses?

 If the scholarships/grants exceed the qualified education expenses, then the student will report the 1098-T and all other educational expenses and scholarships/grants on the student’s tax return. The student will pay taxes on the amount of scholarships/grants that are not used for qualified education expenses.

If this is not the case, go back over your answers regarding the 1098-T.

[mwpdx2245]

Thank you CollenD3.  You answered my first question and your comment helped my find my wrong entry.  I also had a second question --- where does TT complete my FORM 8863, Tuition Credit of $2500 (which I did qualify for 2019. . .and our status hasn't changed).  I know I missed it somewhere, but don't know what section of TT?  Thanks again.

[AmyC]

The program fills out the education form based on your 1098-T and the answers to your questions. It may be that your daughter had more scholarship income this year and things need to be tweaked. Please look at another of my answers for help  in getting your full credit.

You must have your daughter as a dependent.

The credit can be split up - up to $1,000 is refundable  whereas $1,500 is not. So it could be that the AOTC is split into 2 places on your return. You could have $1,500 on sched 3, part 1, line 3 and then have $1,000 on the 1040 line 29 from the form 8863.

Also, see How do I preview my TurboTax Online return before filing?