It depends. There are many options and much maneuvering allowed. There are 2 college credits, the AOTC is only allowed 4 times and reduces your tax liability. The LLC can be claimed unlimited times. Of course, if your income is too high, the credit won't matter. You cannot claim the credit if your MAGI is over $90,000 ($180,000 for joint filers). The IRS has a great brochure that explains how scholarships and tax credits interact.
The options boil down to:
- Do nothing, box 1 equals box 5, no taxable income, no tax credit, nobody files the informational form.
- If the parent can claim a credit:
- parent enters 1098-T box 1 to claim credit - probably LLC since high school
- student enter 1098-T box 5 to claim scholarship income, if required to file. See Filing requirement
Reference: What You Need to Know about AOTC and LLC
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