The taxable scholarship income goes on the dependent's tax return since he is required to file with W2 income of over $12K. Typically without any out-of-pocket qualified education expenses the parents would not be eligible for education credits on their return. The parent's would not need to enter the 1098T on their return.
However, in very unique circumstances it is possible for the parent's to get an education credit by shifting some more of the scholarship to the dependent's income vice paying for education expenses. Of course the dependent tax will increase but the credit on the parent's return may result in a net gain.
Your credit may increase only if the amount of the student's qualified education expenses minus the total amount of scholarships and fellowship grants is less than $4,000.
First, the rules for the scholarship/grant have to allow the funds to be used for other than qualified education expenses. The parent's modified adjusted gross income needs to be below $90,000 ($180,000 for joint filers) to allow the education credit.
Next, enter the 1098T on the parent's return with 4000 box 1 amount or the actual box 1 amount whichever is less and no box 5 amount. Then on the dependent return enter the 1098T and in box 5 increase the scholarship number by the 4000 or box 1 amount entered on the parent's return.
See the Publication 970 reference here for more details on this credit opportunity.
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