It sounds like you're giving up on trying to claim the tuition credit, on your return; which you can do by making more ($4000 more) of the scholarship taxable on her return.
There is "Child Investment Income" simply because the IRS (and Congress) says Scholarship must be classified as investment income for purposes of the "kiddie tax" which must be taxed at the parent's tax rate.
If you are eligible and still want to claim the credit, provide the following numbers and I’ll tell you exactly how to enter it all:
Box 1 amount on the 1098-T
Box 5 amount on the 1098-T
Amount of other scholarships not shown in box 5
Amount of other qualified expenses (tuition, fees, books and other course materials, including required computers) you paid that were not included in box 1
Note that we don’t need amounts for room and board or misc. school supplies (paper &pencils). A printer would not pass muster as required material.
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FYI, here’s my standard answer, on this issue:
You can both use the 1098-T to enter the expenses. If you claim the tuition credit, you do need to report that you got one (the TurboTax interview will handle this) Your son should use the 1098-T because it makes entering scholarship income go smoother. The 1098-T is only any informational document. The numbers on it are not required to be entered onto your tax return. However receipt of a 1098-T frequently means you are either eligible for a tuition credit or deduction or possibly your student has taxable scholarship income. You claim the tuition credit, or report scholarship income, based on your own financial records, not the 1098-T
From the 2018 form 1040 instructions (pg 100): “You may be able to increase an education credit if the student chooses to include all or part of a Pell grant or certain other scholarships or fellowships in income. For more information, see Pub. 970, the instructions for Form 1040, line 17c, and IRS.gov/EdCredit
You essentially have to use a work around in TurboTax (TT). Here's how I would do it. Enter the 1098-T, on your return, but only enter $4000 in box 1. No other numbers. You only enter the 1098-T to get TurboTax to check the proper box on form 8863. Lying to TurboTax to get it to do what you want does not constitute lying to the IRS.
Enter the 1098-T, exactly as received, on the student's return, except enter $4000 less than the actual box 1 amount ( or $4000 more in the box 5 amount).
