College student on medical leave starting March 2019; no refund of tuition. Is scholarship (less than we paid in tuition) taxable?

[jobrien2]

We paid roughly $27K for the first semester tuition, and he received about $11K in school-sponsored grant/scholarship to cover the remainder of the tuition. There were no refunds, because the medical leave started after the refund deadline. 1098T indicates he was enrolled 'less than half time' (which is true - only Jan/Feb/March) and he hasn not yet returned to school.

Going through the interview/question version of TurboTax last night, it told me my son's scholarship is taxable income. However, the forms don't indicate any such thing. And there's nothing at IRS.gov that says it's taxable, since it all went to cover tuition fees that we owed for the semester.

Looking for help with this discrepancy. Thanks!

[Hal_Al · Accepted solution]

None of the scholarship is taxable.  Check the half time or more box, even if it wasn't checked on the actual 1098-T. You are eligible for the tuition credit since you student was actually enrolled for more than 6 hours and you paid more than $4000 tuition