Form 1098-T Education Taxable Grants

[cjs]

My Client's dependent child recd a 1098-T in 2012. Box 2 was $31,565. Box 5 was $5,000 and box 7 was checked.
AGi in 2012 $195,000. Therefore no tax benefit on 8863. And NO tax on $5,000 in box 5.
Then in 2013 the dependent child recd a 1098-T. Box 2 was $0. Box 5 was $5,000 and Box 7 is NOT checked.
AGI in 2013 $201,000. Therefore no tax benefit on 8863.
IT looks like taxable Grant to me.
Anyone have any knowledge about how to NOT pay tax on the $5,000 recd in 2013?
IF so, how does it flow (or not flow) on 1040?
Thanks for your shared intellect.

[TaxGuyBill]

Box 2 means absolutely nothing. Find out what the taxpayers PAID for tuition for each year. That will determine the taxability of scholarships and the amount allowable for credits.

If $0 was PAID for tuition, then the $5000 is taxable on the STUDENT'S return.

[FEDUKE404]

Not necessarily

Sounds like a total of $10k scholarships against the $31,565 qualifying costs. It is not unusual for the spring scholarship/grant/whatever to show up "late" on a Form 1098-T for the next year.

As TaxGuyBill stated, what is shown in box 2 ("billed") of Form 1098 has little relevance to anything.

Strongly suggest you use search and review the numerous prior TTB discussions on this subject.

FE