Q. Do I just change the amount paid on my 1098-T to $10 000 and don't claim any credits as I didn't pay for anything out of the pocket?
A. Yes. You claim the tuition credit, based on your own financial records, not the 1098-T. In the 1098-T screen, click on the link "What if this is not what I paid the school" underneath box 1. Or better yet, just don't enter the 1098-T (or delete it).*
"In 2023, my employer reported my tuition reimbursement as income. Let's say total tuition amount paid that year was $20 000. Employee assistance program lowered that to about $15 000, so the amount added to my W2 income was $15 000. "
Employers are allowed to reimburse employees, tax free, up to $5250/yr. Any amount above that must be reported as income on your W-2. So it sounds like you were reimbursed the entire $20K in 2023 ($5250 tax free and $14,750+/- taxable). You may claim the tuition credit, in 2023, because $15K+/- of it was paid with your taxed money.
The $20K was totally accounted for in 2023. You ignore the extra $5000 on the 2024 1098-T. This is a common error schools make because of the year end timing.
*The 1098-T is only any informational document. The numbers on it are not required to be entered onto your tax return, nor is the for required to be reported. Only, if you claim the tuition credit, you do need to report that you got one. You claim the tuition credit, or report scholarship income, based on your own financial records. Unfortunately that sometimes means working around the 1098-T and the TurboTax interview.
But, this may be real simple. The entire $10K was covered by scholarship, so there is nothing to report. Just don't enter the 1098-T for 2024.
