When a student receives more in scholarships than what was paid for tuition, the excess scholarship is taxable income for the student.
Usually Box 5 (scholarships) is subtracted from Box 1 (tuition paid) on Form 1098-T.
If Box 5 is larger, there is taxable income. If Box 1 is larger, there may be an education credit.
If there is taxable income, the student claims the income.
If there is a credit, the taxpayer that claims the student claims the credit.
Since the scholarship was intended for 2024, you could add it to box 5 on the 2024 Form 1098-T. If you do, you will then subtract it out of Box 5 on the 2025 Form 1098-T.
You also have the choice of letting the school report it in 2025, but if you take this route, the 2025 Form 1098-T may seem to have an inflated amount in Box 5 and the student would need to claim that income if the tuition in Box 1 does not include the expense the scholarship covered.
You will need to decide which way will benefit you best.
IRS Pub 970
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