Include All $5,920 in Pell grants as income by listing on student worksheet Part V, Line 4 the amount of $5,920. This frees up an education credit to reduce any tax owed.
My starting point is always "Assume the 1098-T is wrong" and then I go from there. 🙂 This year there have been reports of colleges who've never reported in box 1 before only including money received from the student in box 1 (and not including tuition paid by scholarship). I always have the client get a financial history from the school.
