Q. If scholarship money remains, it is taxed as excess scholarship (other Income, 1040 line ??)
A. Yes. Beginning with tax year 2022, line 8r of Schedule 1 (previously it went on line 1 of form 1040 with a notation SCH).
Q. The tuition amount paid by the 529 is included as an Other Scholarship entry.
A. No, not usually. It depends on how you are doing it, which isn't clear.
Q. 1099-Q not entered based on TurboTax guidance.
A. Yes, since you have determined that none of the 1099-Q is taxable.
Q. There are no AOTC credits involved.
A. Why not. Even though the grandparent is the owner of the 529 and the student is the beneficiary, the parents may still claim the AOTC (unless their income is too high) if the student is their dependent. See separate detailed post below.
Q. what I should enter or where I should enter it?
A. Manually calculate the taxable amount of scholarship and enter the 1098-T, on the students return, with 0 on box 1 and the taxable amount in box 5.
For more detailed advice, provide some numbers.
