You say "they did in fact claim me as a dependent last year".
I assume last year means 2024 (what we're working on now).
There are two education credits, American Opportunity Credit (AOC) and Lifetime Learning Credit (LLC). The AOC is very generous (100% of the first $2000 expenses paid and 25% of the 2nd $2000). The LLC is 20% of tuition paid. There is a four time limit to claiming the AOC, Since graduation year is typically the 5th calendar/tax year, your parent have probably already claimed the AOC 4 times. You should verify that with them.
Using the gimmick of the student reporting some of his scholarship as taxable, so the parents can claim the credit, isn't as beneficial when they can only claim the LLC. The taxable scholarship is subject to the "kiddie tax" (the student pays tax at the parent's marginal tax rate).
You have to do the math to see if this is all worthwhile. Doing trial tax returns is easier using download TT, rather than online. You could try this tool, but it has limits https://turbotax.intuit.com/tax-tools/calculators/taxcaster/?s=1
Bottom line: you do need to report, at least $2775 of your scholarship as taxable. So, yes, you do need to enter your 1098-T. If box 5 of the 1098-T exceeds box 1, TurboTax (TT) will treat the difference as taxable income, unless you enter additional QEE at books and other expenses. It doesn't matter if a relative paid tuition and/or you never touched the money.
