<p>Not sure what to do with this form in the circumstance. Between grants and scholarships I did not have to pay anything toward my son's tuition. He has a federal workstudy job on campus. Obviously I claim him as a dependent on my return but where does the 1098T factor in? Since we had no tuition cost it doesn't seem like we qualify for any of the education credits. Do I have to use this form on my return? Or does he use it on his? Or do we not need to bother with it?</p>
<p>Does the 1098T show a surplus of scholarship/grant money? If there was more money received than was spent on tuition, fees and supplies, then that money must be reported as income on his tax return.</p>
<p>For example, during the 2011-12 tax year, my daughter’s scholarships and grants totalled $6K more than she spent on tuition and books and such. She needed to pay taxes on the the few hundred dollars that exceded the standard deduction.</p>
<p>If you or your son paid for meals and housing on campus or for books and materials, AND the scholarships are not specifically only for tuition and fees, you can swap the amounts paid to the college for meals and housing for equivalent tuition and fees, and use that for the AOC.</p>
<p>If you truly have no qualified expenses for the fall, don’t claim the AOC. Your child will be in college for parts of five tax years and the AOC can only be claimed in four. It is ok to claim it in tax years 2, 3, 4, and 5 if that is better for you.</p>
<p>And if you never get to claim it because your kid has a ginormous scholarship, well then WOW!!! Congratulations.</p>
<p>Read Chapter 2 in IRS Publication 970 at irs.gov.</p>
<p>All of this has been very helpful. Thanks so much, everyone!</p>
<p>Look at your child’s financial aid award letter and the account statements from his school. <strong><em>Everyone needs to do this when dealing with the AOC (American Opportunity Credit), other educational tax credits, and potentially taxable scholarships/grants. Do NOT rely on just the 1098T - it’s pretty worthless.</em></strong></p>
<p>Did your child have any loans as part of his financial aid package? If so, any loan amounts that were credited to his account can potentially be applied toward the AOC.</p>
<p>Also, as KKmama mentioned, you need to determine if any of the scholarship/grant money is taxable - this is covered in Chapter 1 of Pub. 970. Is he a freshman? If so, then you probably only have to deal with one school term. For the Fall 2012 term, was the amount he received in scholarships/grants greater than the tuition and required fees for that term PLUS the amount he spent in 2012 for required books/materials/supplies? Rely on your own records, not the 1098T - book expenses never appear on the 1098T anyway, and they’re important as a “qualifying educational expense”.</p>
<p>And, as happymom said above “If you or your son paid for meals and housing on campus or for books and materials, AND the scholarships are not specifically only for tuition and fees, you can swap the amounts paid to the college for meals and housing for equivalent tuition and fees, and use that for the AOC.”</p>