"FAFSA" may include loans as well as grants. Ignore loans. That's your money to do with, as you please.
There is a requirement to report taxable scholarship on the student's return. Taxable scholarship, including Pell grants, is the amount of the scholarship that exceeds qualified educational expenses (QEE). Tuition, fees, books and computers are qualified expenses.
"But I never personally received this money" doesn't make it non taxable. You effectively received it.
If the taxable portion of your scholarship plus your W-2 wages was less than $12,400 (a little less in 2018 & 2019), you were not required to file a tax return. So, 10K + 4K, means you, most likely, shoulda filed, although the amount of tax would have been small (about $150-$200).
Your parents should have (most likely) been claiming you as a dependent in the past (because your support came from FAFSA, not your own funds). You (and they) most likely need to be filing amended returns for past years. See below for how this could be a good thing.
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There is a tax “loop hole” available. The student reports all his scholarship, up to the amount needed to claim the American Opportunity Credit (AOC), 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.
