Thanks again for your reply! Are you suggesting that the $8,500 scholarship can be reported on the student's tax return while the remainder of the Form 1098-T amounts can be reported on our (the parents') return - ie: the amounts can be split between returns as long as all amounts are reported on one return or the other? If so and after making this change, the student does not owe any Federal Tax (as you predicted), but does now owe NY state taxes (due to the Other Income generated). However, this is more than offset by the decrease in our (the parents') Federal taxes owing (due to the decrease in our Other Income). Our NY State taxes remain unchanged (Other Income decrease offset by NY 529 deduction/earnings decrease - so no impact). The 1098-T was issued in the student's name. However, he is our dependent and we paid the college expenses and the 529 beneficiary is his father.
