The easiest thing in my mind to do would be to just alter what is entered in the 1098T on his return. Instead of putting 12K for scholarships, put 7K. But is this allowed? Does the 1098T even get filed or is it just something the software uses to do the calculations for you and you can enter whatever you want? He would have a copy of our son’s return in his files to prove that 5K was moved to taxable if he ever needed it.