@KrisD15
<<Yes, that is possible if the parents took 4,000 expenses for the American Opportunity Tax Credit, the student needs to claim the $5,000 scholarship as income. (there are no expenses left to apply to the scholarship).
How is that possible? aren't all the deductible expenses are in Box 1 of the Form 1098-T (other than some "required" books and labs). What is NOT in Box 1 of Form 1098-T that could be claimed for the AOC or lifetime learning credit?
<<No, you can't double dip, that's why the parents enter the 1098-T into their program so the program can do the math.>>
if Box 5 exceeds Box 1 and the student is a dependent the Parents are NOT to enter the 1099-T of THEIR return; it goes on the students return and in this example the $1000 is income. In fact, using your example, there is NO impact on the parent's tax return if the numbers in your example are keyed into TT (I tested it to confirm).,
the person asking this question is doing something wrong in the answering the critical questions that TT is asking. Once that is fixed, the taxable component will be $1,000.
Form 1098-T is confusing, but this is how it works to my understanding:
1) if the student is a dependent, the PARENT files the 1098-T, UNLESS Box 5 exceeds Box 1 then the STUDENT files the 1098-T and is liable for the taxes on the difference.
2) if the student is NOT a dependent, the STUDENT files the 1098-T under all circumstances.
