Our son was a full time undergrad student who graduated in May 2022. He had $30K in wages last year and provided over half of his own support. We have not claimed him as a dependent since 2020. His Spring 2022 semester charges, which were billed in Dec 2021, were $11k ($10k tuition plus $1k in misc fees and a meal plan). We paid $2k of the charges in Dec 2021 and $6k in Jan 2022. They also posted his $3k in awarded grants/scholarships in Jan 2022. His 2022 1098-T has $0 in Box 1 and $3k in Box 5 so TT is treating the scholarship as $3k in taxable income.
The university posts the supporting details behind each 1098-T online so we can see their computation for each box, as well as the payments and charges data. Their method for calculating the amount for Box 1 is to use the LOWER OF charges billed or payments received. Since billings in 2022 were $0, that's what they put in Box 1. I've read through the 970 and the 1098-T instructions, etc., and I do not see an option for them to calculate Box 1 in this manner. Box 1 should be payments received in 2022 INCLUDING the $3k scholarship. So $9k in Box 1 and $3k in Box 5. If I go into TT and put $3k in Box 1, then the tax owed on the scholarship goes away - great. If I put $9k in Box 1, then he also gets the $2,500 AOTC. He's only received that credit one time in the past due to too much parent income. Do the regulations permit the university to calc Box 1 in this manner or is a leftover pre-2018 method? Should I put the $9k in Box 1? We have proof that we paid the $6k in Jan 2022 and that the $3k scholarship was posted in Jan 2022.
