If you are eligible for taking the American Opportunity Credit and your student does not have a filing requirement or made little income you can do this.
Assume box1 tuition is $12,000 and scholarships in Box 5 is $8000. On your return you could report that you spent the entire $12,000 from your funds and so claim the credit based on the full $12,000.
While the $8,000 is income to the student, if the student doesn’t have a filing requirement because of low income, the student would not have to file a return and so not be taxed on the scholarship amount.
