No 1098-T but taxable scholarship

You can enter the amount of your scholarship without a 1098-T.    Go to the Education section and click Start next to Expenses and Scholarships (1098-T).

Answer NO to Did you get a 1098-T?   

Answer NO to the exceptions question.   

Answer the book expense/529 plan questions.  

The next page will ask about scholarship income.   Enter the taxable amount (the amount that exceeds your qualified expenses) of your scholarship income.    TurboTax will add taxable income in that amount to your return.    

Make sure you mark the box indicating 'someone else can claim you' in the Personal Info section.  

You can enter the amount of your scholarship without a 1098-T.  

 Go to the Education section and click Start next to Expenses and Scholarships (1098-T).

Answer NO to Did you get a 1098-T?   

Answer YES to the exceptions question.   

You want to be able to enter the tuition, as well as the scholarship amount. Only the difference is taxable.  Entering book expenses will reduce the taxable amount. 

Actually, either way is correct, as long as you make the adjustment. 

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 There is a tax “loop hole” available. The student reports all his scholarship, up to the amount needed to claim the American Opportunity Credit (AOC), as income on his return. That way, the parents  (or himself, if he is not a dependent) can claim the tuition credit on their return. They can do this because that much tuition was no longer paid by "tax free" scholarship.  You cannot do this if the school’s billing statement specifically shows the scholarships being applied to tuition or if the conditions of the grant are that it be used to pay for qualified expenses.

Using an example: Student has $10,000 in box 5 of the 1098-T and $8000 in box 1. At first glance he/she has $2000 of taxable income and nobody can claim the American opportunity credit. But if she reports $6000 as income on her return, the parents can claim $4000 of qualified expenses on their return.

Books and computers are also qualifying expenses for the AOC. So, extending the example, the student had another $1000 in expenses for those course materials, paid out of pocket, she would only need to report $5000 of taxable scholarship income, instead of $6000.