Q. If that happens, I just show the IRS that I did in fact pay right? With records from my college?
A. Yes. We have not seen a single case, in this forum, where the IRS held the taxpayer to the 1098-T amounts.
The lifetime Learning Credit (LLC) is 20% of tuition (up to $10K). So 20% x $3282 = $656. None of it is refundable. If you declare the $2000 scholarship as taxable, it's $5282 x 20% = $1056. Assuming you're in the 12% bracket, the tax on the $2000 scholarship is $240. So, you come out $160 ahead.
