Local scholarships

[Ageb2020]

My daughter received scholarships totaling $5000 from local community sources. We are claiming her. Do I put that on my taxes somewhere? We also got a 1098-T, and on it is payments of $10,000, and scholarships of $3450. The numbers don't match of the scholarships she received and what they say she got. Some of the scholarship money was refunded to her. Not sure what to do or where all to put numbers. Help? 

[Hal_Al]

Yes, you may claim a very generous tuition credit, because she is your dependent.  The credit is worth up to $2500 on as little as $4000 of payments.   Since 10,000 (box 1) was paid and only $5000 was from scholarships, you qualify.

Rather than jumping through the hoops to make the numbers match, just enter the 1098-T, as is; since you know you qualify.

Even though she got cash back, none of her scholarships are taxable, because the net expenses, even after you claim a credit, exceed scholarships received (10,000 - 4000 = 6000, which is more than the $5000 scholarships).

If the $5000 scholarships were in addition to the $3450 shown in box 5, the answer is a little different.  You can still claim the FULL credit,  but she will need to report a little scholarship income, if she even needs to file a return.

[Ageb2020]

I don't actually know what that $3450 is. And with schools closed all over the place, not sure who to even ask. We also received no paperwork (during tax season) mentioning the $5000. So it may be part of the same. I just don't know. 

[NCperson]

you now have until July 15th to file, so might be best to wait until the school opens to get an answer. 

[Hal_Al]

@Ageb2020  - Does your student-dependent have any income? If, so how much and what is the source of her income?  It may well be that it doesn't matter what the exact numbers are.  In general, if she has less than $12,200 income, including any taxable scholarship, she does not need to file and you can claim the full tuition credit.  Worst case: she has only $2450 of taxable SCH (10,000 -4000 =  6000.  $5000+3450-6000=2450).