The 1098-T is only an informational document. The numbers on it are not required to be entered onto your tax return. The simple thing to do is enter the 1098-T with $4000 in box 1 (the amount needed to claim the maximum AOTC) and 0 in box 5. Lying to TurboTax to get it to do what you want does not constitute lying to the IRS.
Q. Also, is this risky since it will no longer show what is on the 1098-T?
A. No. What you enter is not sent to the IRS. You only enter a 1098-T to get TT to check the box, on the IRS form (8863), that says you got a 1098-T.
Q. I have the different amts. on my return with the difference on my kid's return?
A. The IRS does not match the two returns. So, it doesn't matter.
Q. Do both returns need to be filed the same day?
A. No
Q. when doing this and can be done electronically using TurboTax and not filed out manually?
A. Yes, even with this workaround and the one your student uses on his return, you both can e-file.
Q. What about additional unearned income on their return without a W-2?
A. It's a common situation. So common that the IRS has a added (new in 2022) a new line for it on Schedule 1 (line 8r).
Q. How does the student enter it on his return?
A. Enter the 1098-T, exactly as received, on the student's return. Enter book/computer expenses separately. In his interview, you should eventually reach a screen called "Amount used to calculate education deduction or credit" Be sure the amount in that box is $4000 (the amount claimed on the parent's return). That will put all his excess scholarship as income on his return.
Be advised some people have said, in previous years, they're not getting the "Amount used to claim the tuition deduction or credit" screen on the dependent’s interview. Check the student information work sheet (part VI, line 17) to verify it was entered. If not, the alternate workaround is to enter $4000 less than the actual box 1 amount, when you enter the 1098-T.
There's yet another (and simplest) work around. Manually calculate the taxable amount of scholarship and enter the 1098-T, on his return, with 0 in box 1 and the taxable amount in box 5. In that case be sure the amount in the "Amount used to claim the tuition deduction or credit" box is 0.
