It depends on weather you can get (and want) an education credit.
First, lets talk about your forms.
You have 12,000 Tuition and 9,000 scholarships. That leaves 3,000 in expenses plus books and supplies which are not on the 1098-T. Ask the student what they spent on Books and Supplies and add that.
Next you have 16,000 distribution and you spent 11,000 for Room and Board, that leaves 5,000 excess distribution.
Allocate the 3,000 expense to the 5,000 leaves 2,000 distribution the student needs to claim (less books and supplies)
In this case, the student claims 2,000 distribution, but that is split between Earnings and Contribution.
You can enter the 1099-Q into his TurboTax program and then claim 14,000 in expenses.
(You can enter 14,000 as room and board so the program makes the proper calculation, this is easiest, or split it up as 11,000 room and board and 3,000 tuition)
OR
You can have the student claim 2,000 of the scholarship.
On the Student's return, go to the Education Section under Deductions & Credits and only enter 2,000 in Box 5, nothing in Box 1.
IF YOU DO WANT A CREDIT, and you are eligible for one, you can claim 4,000 of the tuition and have the student claim 6,000 of the scholarships.
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