This is common. When you entered the 1098-T, in TurboTax (TT), while doing your return, it calculated that you do not qualify for a tuition credit.
In addition, it determined that your daughter has taxable scholarship income that needs to be reported on her tax return. If you don't remember the amount (or can't find it), it doesn't matter. Just enter the 1098-T, on your daughter's return (even though you already entered it on your return**). TT will re-calculate the taxable portion, on her return.
** TT ended up not using any of the 1098-T info on your return.
BUT
There is
a tax “loophole” available. The student reports all his scholarship, up to the amount
needed to claim the American opportunity credit, as income on his return. That
way, the parents (or himself, if he is not a dependent) can claim the tuition credit on their return. They can do
this because that much tuition was no longer paid by "tax free" scholarship. You cannot do this if the school’s billing
statement specifically shows the scholarships being applied to tuition or if
the conditions of the grant are that it be used to pay for qualified expenses.
Using an example: Student has $10,000 in box 5 of the 1098-T and
$8000 in box 2.
At first glance he/she has $2000 of taxable income and nobody can claim the American
opportunity credit. But if she reports $6000 as income on her return, the parents
can claim $4000 of qualified expenses on their return.
You can both use the 1098-T to enter the expenses. If
you claim the tuition credit, you do need to report that you got one (the
TurboTax interview will handle this) Your daughter should use the 1098-T because it
makes entering scholarship income go smoother.
You'll have to use a workaround in TurboTax. Change the numbers at the 1098-T entry screen. Using the above example; you enter $8000 in box 1 and $4000 in box 5. On her return, your daughter enters $8000 in box 1 and $14,000 in box 5.
