Question on American Opportunities tax credit. I learned from a friend a means of taking the credit even though my sons scholarship was roughly equal to the qualified expenses on his 1098T. It seems if the scholarships are unrestricted that you can "designate" that they be used for unqualified - and thus taxable school expenses. While this increases the dependant childs taxable income, it reduces the scholarship monies that must be subtracted off the qualified amount and may allow the parent to take the AO college expense credit up to $2500 for 2009 and 2010. It almost seems to good to be true but there is an example on IRS publication 970 which shows exactly such a case on page 11.
While I am fairly certain I can claim the credit in this manner for 2010, my question is can I go back and get the credit for 2009 by filing an amended return for both my son and myself. While my son had earned income of $4400 in 2009 and would have to pay additional tax and penaltied on the additioanl $4000 of income, this should be more than offest by the credit I would receive at a 25% income bracket. Would love to get some feedback on this - thanks!
While I am fairly certain I can claim the credit in this manner for 2010, my question is can I go back and get the credit for 2009 by filing an amended return for both my son and myself. While my son had earned income of $4400 in 2009 and would have to pay additional tax and penaltied on the additioanl $4000 of income, this should be more than offest by the credit I would receive at a 25% income bracket. Would love to get some feedback on this - thanks!
