Just seen it too often from the divorce side. Couple reaches a settlement, divorce, and then one party realizes that there is a tax credit or deduction that they want and think it is unfair that the other side gets it. The tax code is often unfair, and many divorce attorneys don’t consider all tax issues in enough detail before agreeing. That’s why divorces are final and not left open to renegotiate every year at tax time because someone will always find something that is unfair. Wiseacre and ex agreed to split the costs of college after scholarships and the 529 from their own funds. How each funds that agreement is up to him/her, and in this case only the father might be eligible for the credit They are his funds to do with what he wants. Once you are divorced, you don’t get to say, or even suggest, how the ex uses his tax refund.
If congress wanted the AOTC to go to the school or to the child, it should have written the law that way. It goes to the parent who claims the student as a dependent and unlike the dependent exemption, it cannot be traded. Transfer the exemption, lose the credit too.
You are interested in discussing taxes, but I bet you wouldn’t be so interested in having your MIL tell you how to spend your tax credits, or for the IRS or school to tell you it must be used for tuition to reduce the amount someone else has to pay. Who would be happy to have an ex say “Yes, we agreed to each pay $10k, but you must pay the $4000 first and then we’ll each pay $8000.” How do we know that the ex didn’t consider this $4000 when agreeing to pay half? He’s retired, he makes less than his ex, he might have factored the AOTC into his negotiations.