@g0ldEE I assume the school put the VA benefits in box 5 of the 1098-T (as opposed to the $15,500 be a separate scholarship).
Q. How do we report this, so it doesn't show income to the TP?
A. Just don't enter the 1098-T.
The 1098-T is only an informational document. The numbers on it are not required to be entered onto your tax return. However receipt of a 1098-T frequently means you are either eligible for a tuition credit or possibly your student has taxable scholarship income.
If you claim the tuition credit, you do need to report that you got one.
You claim the tuition credit, or report scholarship income, based on your own financial records, not the 1098-T.
If you do need to enter the 1098-T, there is a place, in the TT interview, to enter books expenses.
Or if you find it easier, just change the numbers in boxes 1& 5 to what your records show. The 1098-T that you enter in TT is not sent to the IRS.
