@PS1366 thank you for the question. So, you generally need to report the excess as taxable income on the federal return for the person issued the 1098-T (this may be the student and not the parent), but there is one caveat here. If your income, including excess scholarship and aid income was below the standard deduction for 2022, which is $12,950, you do not need to file a tax return.
As the parent of two college students, most colleges do require a tax return for the Free Application for Federal Student Aid (FAFSA), so that may be a reason to file a tax return. Also, if you had any tax withholdings and you are under the standard deduction you would want to file a tax return to get those withholdings back.
Best of luck in college and work hard!
All the best,
Marc T.
TurboTax Live Select Time Tax Expert
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