Look at line 1 of form 1040. There may an amount (probably 2392) to the left with "SCH" (scholarship).
There is a tax “loophole” available. The student reports all his scholarship, up to the amount needed to claim the American opportunity credit or Lifetime Learning Credit or Tuition and Fees Deduction ([TFD] on form 8917), as income on his return. That way, the parents (or himself, if he is not a dependent) can claim the tuition credit on their return. They can do this because that much tuition was no longer paid by "tax free" scholarship. You cannot do this if the school’s billing statement specifically shows the scholarships being applied to tuition or if the conditions of the grant are that it be used to pay for qualified expenses.
Using an example: 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 and nobody can claim the American opportunity credit. But if she reports $6000 as income on her return, the parents can claim $4000 of qualified expenses on their return.
Go through the education section again. Go through the entire education interview until you reach a screen titled "Your Education Expenses Summary". Click edit next to the student's name. That should take you to a screen “Here’s your Education Summary”. Click edit next to “Education Information”. When you get to the screen titled “Amount Used to Calculate Education Deduction or Credit”, verify the amount you want to use or change it.
If all else fails, at the Your Education Expenses Summary". Click delete next to the student's name and start over.
