1). The State wants me to send in the 1098 T form along with my W-2s and other information. It will be OK right?
Up until now, we've been talking about how you are going to file a federal return to claim a tuition credit. Now you're asking about a a letter you've already received from the state? Which state and what did you claim? Most states don't have a tuition credit or deduction. You may have to start a whole thread to get a response from somebody familiar with your state's tax rules.
2). while I'm trying to do my sons taxes on TurboTax now I still do a 1098 T form for my son . I put 0 in box 1and the amounts 5-1 in box 5 correct?
No. You put 0 in box 1 and what you calculate as the taxable amount in box 5. You should end up with the box 5 amount on line 1 of form 1040 (added to any other line 1 income) with the notation SCH.
3). I don't put it in other income?
If your student has other income, it gets reported
