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Annual reminder: How to optimize AOTC


Pegasus
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I like to remind folks each year that you are allowed to optimize your AOTC even if the buik of your student's eligible expenses are covered by grants/scholarships by having the student claim a portion of those funds as going towards non-eligible expenses and claiming that amount as income.  This only works for grants/scholarships that do not specify that they MUST be used for tuition, etc.

Here's a fact sheet on how it works directly from the U.S. Treasury website: https://www.treasury.gov/resource-center/tax-policy/Documents/Report-Pell-AOTC-Interaction-2014.pdf

it's relatively simple to do using TurboTax but I have to do a quick help search each year to refresh my memory on how to input things correctly.

 

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