The school should not have included any of the employer assistance in box 5 of the 1098-T. But some mistakenly do. Since box 5 is less than $5250, I assume the $2125 was a separate scholarship from the employer assistance.
Do check the box received tax free assistance, Do not check the other box (already included on W-2). Then enter $5250 when asked the tax free amount. If the $2125 was the employer assistance over $5250, then you do it differently.
$7842 - 5250 - 2125 = $467. You only have $467 of qualified expenses for the tuition credit. If the $2125 was an unrestricted scholarship, you have the option of declaring that taxable and freeing up $2125 of tuition for the tax credit. You don't have that option for the $5250.
