Lots of issues, in no particular order:
The Lifetime Leaning Credit (LLC) is non refundable. If she has almost no federal tax liability, that's how much LLC she will get.
Her parents should claim her as a dependent (see "Graduation year" below). Her parents should get the LLC on their return, if they have a tax liability. You have an entry error. Just entering the 1098-T should be all you need. Try deleting and starting over.
Her parents cannot deduct her student loan interest, unless they paid it and were co-signers on the loan. She cannot deduct the interest if she is a dependent.
TT will never say sisters $1682 in grants has to be counted as income on their taxes. It will say it has to be claimed on the student return, if the parents claim the full $8600 on their return (and they should). Alternatively they claim 8600-1682, and the student claims no scholarship income.
There is no more "Hope" credit, been gone for years. Choices are LLC or Tuition and Fees deduction (TFD, restored by new law Dec. 2019). LLC is probably better.
I'm not familiar with Oregon tax rates, but "she has almost no federal tax liability and is going to give the state a few hundred bucks", is not likely in most states.
It's complicated. You have multiple entry errors. Start by deciding whether she will be a dependent or not. That will dictate how the entries will be made.
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Graduation year
If he/she was a student (under 24) for at least 5 months and lived with you for more than half the year, and did not provide more than 1/2 his own support for the whole year, you can still claim him. Be sure he knows you're claiming him, so he doesn't claim himself. He can only be claimed once. But, he can "file taxes" without claiming his own exemption.
The real question is who should be claiming him in this "transition" year to adulthood. You two have to agree on who is going to claim his exemption. Each should do their taxes both ways and see which way the family comes out best. Even then, you have to meet the rules. The rule is that a child of a taxpayer can still be a “Qualifying Child” dependent, regardless of his income, if:
- he is a full time student under 24 for at least 5 calendar months of the year (graduating in May usually means you meet the 5 month rule)
- he did not provide more than 1/2 his own support (scholarships are considered 3rd party support and not support provided by the student).
- lived with the parent (including time away at school) for more than half the year
So, it usually hinges on "Did he provide more than 1/2 his own support in 2019.
The support value of the home you provided is the fair market rental value of the home plus utilities & other expenses divided by the number of occupants. IRS Publication 501 on page 20 has a worksheet that can be used to help with the support calculation. See: http://www.irs.gov/pub/irs-pdf/p501.pdf
