Q. Does this “loop hole” work for 2023 if the filer is the student.
A. Yes, if the student is not and and can not be claimed as a s dependent, by someone else.
Q. It seems that my tax refund is wiped out to if report my 1098T in full?
A. That is possible, if your scholarship income is high enough to push you total income (AGI) down the Earned Income table, to where you're getting less EIC (Earned Income credit). It should not effect your Child Tax credit/Additional Child tax credit.
But, the American Opportunity Credit is generous enough (up to $2500) that it should offset some of that loss, even though it appears that your reporting even more income. The only way to be sure, is change the numbers and compare the result. Change it back, if it doesn't work.
Q. Do I report the offer grant amount in other “income” in W2 section and leave block 5 blank on the 1098T input area?
A. No. You adjust the inputs at educational expenses section. The simple method is to increase the amount of the scholarship allocated to room and board.
Using the example above,
Student has $10,000 in box 5 of the 1098-T and $8000 in box 1. At first glance he/she has $2000 of taxable income can not claim the American opportunity credit (AOC or AOTC). But if she reports $6000 as income on her return, she can claim $4000 of qualified expenses on her return, for the AOC. How to do that? Enter the 1098-T, as received. When asked if any was used for room and board, answer yes. Then enter the amount you want to be taxable ($6000 in the example), 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 income on line 8r of Schedule 1.
