Hal_Al
Level 15

Education

Yes, you may claim a very generous tuition credit, because she is your dependent.  The credit is worth up to $2500 on as little as $4000 of payments.   Since 10,000 (box 1) was paid and only $5000 was from scholarships, you qualify.

Rather than jumping through the hoops to make the numbers match, just enter the 1098-T, as is; since you know you qualify.

 

Even though she got cash back, none of her scholarships are taxable, because the net expenses, even after you claim a credit, exceed scholarships received (10,000 - 4000 = 6000, which is more than the $5000 scholarships).

 

If the $5000 scholarships were in addition to the $3450 shown in box 5, the answer is a little different.  You can still claim the FULL credit,  but she will need to report a little scholarship income, if she even needs to file a return.