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Education
Theoretically TurboTax handles all this when you just enter all the facts. One of which is to say you used some of the scholarship for room & board .
But, as you are experiencing, the result is not always what you want and expect. I strongly recommend you use the workaround shortcuts:
There's a simple way to enter it on his return. Manually calculate the mount of taxable scholarship ($5359) and enter a 1098-T with 0 in box 1 and the taxable amount in box 5. Enter no other numbers.
The simple way to enter it on your return would have been to enter a 1098-T with $4000 in box 1 and 0 in box 5. Enter no other numbers. Do this even when you do the amendment.
The 1098-Ts, you enter, are not sent to the IRS.
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That said, here's my "standard answer" for that situation.
The way you enter this in TurboTax (TT), when asked if any of the scholarship paid for room & board, in the parent’s interview, enter $6000 (in the 1st example above).
You can both use the 1098-T to enter the expenses. If you claim the tuition credit, you do need to report that you got one (the TurboTax interview will handle this) Your student should use the 1098-T because it makes entering scholarship income go smoother and puts the income in the right place on the tax forms, line 8r of Schedule 1 (this is a new location starting in 2022).
You essentially have to use a work around in TurboTax (TT). Here's how I would do it. Enter the 1098-T, on your return, but only enter $4000 in box 1. No other numbers. You only enter the 1098-T to get TurboTax to check the proper box on form 8863. Lying to TurboTax to get it to do what you want does not constitute lying to the IRS. The 1098-T that you enter in TT is not sent to the IRS.
Enter the 1098-T, exactly as received, on the student's return. Enter book and computer expenses separately. In his interview, you should eventually reach a screen called "Amount used to calculate education credit" (or similar wording). Be sure the amount in that box is $4000. That will put all his excess scholarship as income on his return (line 8r of Schedule 1).
Be advised some people are saying they're not getting the "Amount used to claim the tuition credit" (or “Education Expenses used for a Tax Credit”) screen on the dependent’s interview. Check the student information work sheet (part VI, line 17) to verify it was entered. If not, the alternate workaround is to enter $4000 less than the actual box 1 amount, when you enter the 1098-T.
There's yet another (and simplest) work around. Manually calculate the taxable amount of scholarship and enter the 1098-T, on his return, with 0 in box 1 and the taxable amount in box 5. In that case the amount in the "Amount used to claim the tuition credit" box is 0 (if it comes up).
How to enter the “correct way” https://ttlc.intuit.com/community/tax-credits-deductions/discussion/re-as-a-parent-do-i-need-to-file...