“1098-T scholarships exceed tuition no AOC credit”)

[CPizarro]

My daughters situation

1098-t 

box 1- 9,138

box 5- 31,127

earned income from job 12,143

so far it shows that she will she will owe about 3,000

she doesn’t qualify for an education credit 

she put that she cannot be claimed as an independent, although she is my dependent 

what should we do

[AmyC]

Let me give you two scenarios:

If she is your dependent, you can claim the education credit, if your qualify. Your tax liability is probably larger than hers to qualify for more credit.  Currently:

• For the full credit, your MAGI (modified adjusted gross income) is less than $80,000 ($160,000 if you're filing jointly)
• For a reduced credit, your MAGI is between $80,000 and $90,000 ($160,000 and $180,000 if you're filing jointly)
• There is no credit given if your MAGI is above $90,000 ($180,000 if you’re filing jointly)
• You could have $2500 tax relief AOTC plus $500 for claiming her as a dependent.

If you are claiming her and the credit, you enter the 1098-T with box 1 $4000 and the scholarship is blank.

Your daughter enters Box 1 minus $4,000 and box 5 full amount

If she is not being claimed, she can claim the education credit by claiming $4,000 for tuition.

1. Enter the 1098-T as it is.
2. Claim room and board expenses of .... box 5 is $31,127  minus  $5,138 (used on education) equals the amount to enter for room and board.
3. This triggers the education credit.

The AOTC is split into two parts. The non-refundable part lowers tax liability up to $1500. Another$1,000 is refundable.

[CPizarro]

I’m confused about:

1. Claim room and board expenses of ....box 5 is $31,127  minus  $5,138(used on education) equals the amount to enter for room and board.

what do I put in box 5?

where  do I enter the 5,138?

[AmyC]

The 1098-T is entered exactly as it is for your daughter. You won't change any numbers on the 1098-T. When the program asks about expenses, you will enter the room and board as $25,989. We aren't supposed to do the math for you. I gave you the equation but did not do the subtraction. 

I stated:

1. Enter the 1098-T as it is.
2. Claim room and board expenses of - then I left you hanging with only the numbers to use. My apologies.

The $5138 is not entered by you. The program will figure out that is the amount of education tuition paid by the scholarship. This leaves $4k of education expenses to be claimed for the credit.

I hope this makes more sense. You are doing a great job helping your girl!