If not being claimed as a dependent, enter the 1098-T, exactly as received, on the student's return. Enter book expenses separately. When asked if any of the scholarship was used for room and board, answer yes. Then enter $13,279* in the pop up box. R&B are not "qualified educational expenses". So, this is how you tell TT that it is taxable. Note the wording at that screen “or other expenses”. You didn’t have to literally use the scholarship for R&B. This will put the taxable scholarship on line 8r of Schedule 1.
*20804 -11116-409 =9279 of the scholarship is already taxable. By making $4000 more taxable (9279 + 4000 = 13279), we free up $4000 of expenses for the tuition credit. TurboTax will automatically give him the credit.
Note: if you decide that he cannot be your dependent, there is an important question in his personal info section that must be answered correctly to get him the full $2500 AOTC: more than half his support comes from his earned income.
If you encounter a screen called "Amount used to calculate education credit" (or similar wording). Be sure the amount in that box is $4000. That screen doesn't always come up.
