Can our daughter claim herself and pay less or can we split the scholarships between our tax return and hers to reduce taxes or qualify for college deductions?

[Hal_Al]

You can't go by jumps on the "refund meter". It's only a work in progress. The end result is what counts. $4100 less tax (or bigger refund) doesn't sound unusual with two dependents in college.  Review your return, line by line, to look for obvius errors. The education credit(s) is calculated on form 8863 and is split and entered partially on line 17 of form 1040 and line 50 (1040 schedule 3)

[kc4braves]

That was the jump not including my son.  That's why I am concerned.  I went back and put everything in showing box 5 greater than box 1 by about $5000 and it still shows a credit but less of one.  I really don't get it.  Both say to upgrade.  Do I need to upgrade to be able to see the return line by line? The return was complete except for adding the 1098-T info.

[kc4braves]

When I was working on it with less showing in box 5, it asked questions about whether she used any scholarships for room and board. I read the info regarding that and it indicated she could move any money used for room and board from scholarship money not earmarked for tuition and fees to make her eligible for the tax credit.  There were blanks available to enter this amount. That is why I went back to try with full amount entered in box 5. However, when I did this the opportunity to move money to room and board went away. It no longer asks those questions. It sounds like this is basically what we are trying to do.

[Hal_Al]

I'm not familiar with TT upgrade steps. I use the download (desktop) software. No upgrades required.

[Hal_Al]

If you are going to use the work around (and that's the only way to use the loop hole) by changing the box 5 amount, you stop there. You don't use the rest of the interview.

[kc4braves]

I have always used the free turbotax online because we don't itemize or have anything complicated...or we didn't.  I guess I will upgrade to deluxe and see what forms they say I need to get the credit.  If I get any credit it will cover the $29.99 and I guess, worse case scenario, I go back to not claiming the credit and having it all on the kids returns.  I just don't completely get it.  Thanks for your help.

[kc4braves]

I finally understand this process and found a great article explaining it even more.  However, what I did not consider was that taking the credit and increasing my daughters unearned income to do so, may mess her up on the FAFSA.  The AOTC will make our income almost $5000 higher and her income will be $5000 higher on the FAFSA.  She receives a grant from her school based on the FAFSA numbers.  Just wanted to share this in case anyone else in a similar "boat" reads this.  All angles need to be considered.  I already filed taking the credit but am now second guessing myself since the credits for my children are less than the grant she receives.

[kc4braves]

I have another question related to this question. I went back to  2014 ( my son's first year of college) and discovered we did take a $300 credit on form 8863 line 19.  I think that was the LLC.  We were looking to ammend tax returns to claim AOTC for him for 2015, 2016 and 2017 and claimed AOTC already for him for 2018.  Are we allowed to take the AOTC for 4 years since he apparently used the LLC in 2014?

[Hal_Al]

Yes, BUT, there are two "4 year rules"  to be aware of:
1. You may only claim the AOTC four times for the same student
2. You may not claim the AOTC if the student has already "completed" 4 years of college. For most students that means getting a BS or BA, but it's possible to have meet the rule without  degree. For sure, grad students do not qualify for the AOTC

[kc4braves]

He just graduated with BS in May. So he attended fall 2014-Spring of 2018 which is why there are 5 tax years.

[Hal_Al]

 "In 2014 ...we did take a $300 credit on form 8863 line 19.  I think that was the LLC".

Line 19 of form 8863 can be either LLC or AOTC. If there is an entry on line 9 of form 8863 (and line 68 of form 1040 or line 44 of form 1040A) you claimed the AOTC, not the LLC.
Otherwise, you should be good to amend 2015-17.  If not, pick the best 2 years to amend. It is too late to amend 2014.

[kc4braves]

Right and it may be too late for 2015 depending on the date we filed. I think it is 3 years from the date taxes were filed for 2015.  I have my return and the date but am looking for my sons. I need a better secretary. :(  I will check the boxes you mentioned. Thanks.

[kc4braves]

OK. So I am about to pull my hair out trying to figure out how to amend my 2017 return on Turbotax.  It says I need to upgrade to access the return but I can't for the life of me figure out how to do that even after following the directions. I have the 2017 returns printed out and saved on my laptop ( I don't think that includes any forms used to get the numbers, though) I really just need to know what forms I need to use to get the AOTC for both kids and any forms needed because I am ammending. I thought it might be easier to amend through turbotax but maybe I can do it myself.

[Hal_Al]

You have until 4-15-19 to amend a 2015 return (unless you filed an extension back then which gives you to 10-15-19).
The mechanics of amending is beyond my expertise. You may have to start a new thread to get help.  I usually just refer people to this FAQ
 <a rel="nofollow" target="_blank" href="https://ttlc.intuit.com/questions/1894381-how-to-amend-change-or-correct-a-return-you-already-filed"...>

[kc4braves]

I think I have been overthinking the whole process but Pub 970 scares you to death about making mistakes. lol  I have two questions: 1. If a student's scholarships were enough to cover tuition, fees, books and room and board, can they still claim the tax credit based on moving some of the tax-free scholarships to the taxable income of the student? or must the family have been required to pay some portion of room, board or books?  2.  IS there an example in which the student has some scholarship money earmarked for tuition that cannot be moved but some scholarships that can be moved? Thanks.