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Since part of your scholarship is going to be considered taxable income, you should enter the information from your Form 1098-T into your return, along with the other education expenses that have been entered.
TurboTax will then do the calculation and report the taxable amount of your scholarship as income on your Form 1040.
You should then get some guidance about whether you are required to file the return. Depending on the amount of income reported and the fact that you are being claimed as a dependent, you may not actually be required to file. Just be sure that you did indicate that you are being claimed on another return when you went through the My Info section of your return.
For more information see the following TurboTax article: Do I need to file my own taxes if I'm a dependent?
If the difference between box 5 and box 1 of your 1098-T plus any other taxable income you have is less than $12,200, you do not need to file because you total income is under the filing requirement.
You should be aware that t
here 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 1. 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.
If you and your parents do take advantage of this loop hole, you should file even though you had less than $12,200 of total income, to document that you reported the extra income.
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