This is our first year with this form. I copied it into Turbotax, but Turbotax is telling me both Box 1 and 2 cannot be filled in. They are filled in on the form from the college and differ by $4,000. Did the college make a mistake? What should I do?
Well box 1 is actual payments received and box 2 is billed qualified tuition and related expenses, right?
I did not know schools could use both, I thought they had to choose.
Which box matches your information of what you actually paid for tuition and related fees in 2015?
Was some of the payment made in 2016?
Neither! Box one is still a little less that we paid for tuition, fees, room and board. Box 2 seems to be approximately that amount minus federal loans and another $300. The scholarship box seems to contain the amount of her need-based scholarship and an outside scholarship, but not merit aid. While it’s for the school year 2015-16, I paid all the expenses in 2015. I guess a call into the school’s financial office might be next.
Your school sent a 1098-T with both Box 1 & Box 2 filled in?
My D’s 1098T had a phone number listed you could call with questions.
Seems best to ask them.
But for purpose of figuring the taxable amount of scholarships (total grants and scholarships minus tuition, fees, books) or American Opportunity tax credit (tuition, fees, book expenses paid in 2015), room and board expenses are not considered qualified education expenses and scholarships covering them are taxable.
And the loan amounts shouldn’t be on the forms either. Tuition and room and board (books and supplies only if school paid for them, like on an athletic scholarship) only, and only scholarships and grants. No loans, no room and board. Sometimes the fees are a little different than what you paid because some fees are not included, such as for health insurance or the health center, some athletic fees, transportation.
You probably should delete imported 1098 and add one manually. You can then adjust all amounts to reflect what you have actually paid. There is a chance that merit scholarship was not posted on your kid’s account until 2016 so it was not included on 1098.
Supposedly 1098 is just an informational tool mainly to remind the student that educational tax breaks exist.
I would still clarify with the school why both boxes were filled in and if and which of these numbers they reported are correct.
I’m reporting back just in case this can help someone else. I talked to the school’s finance office. It’s complicated, but beginning to make more sense. I am only using box 2 in Turbotax. That box reflects the tuition I paid and some of the fees. What’s complicated is that I paid both semesters of tuition in 2015, but the scholarships were applied in both 2015 and 2016, when each semester started, so only one semester’s worth of scholarships are on there. At any rate, I’m still getting the AOTC, the important thing here. 
The issue will be in the spring of senior year - you’ll have no tuition payments but an entire semester of scholarships.
Yes, it probably depends when spring semester starts, because aid is applied 10 days before term starts.
At my D’s school they started back early January so the aid posted late December. So it all counted and was reported for 2015. A school where you don’t start back until after the 11 th of January would apply aid after Jan 1 of year 2016.
I am worried about that @twoinanddone. But by then I will have taken the four years of the AOTC. But does that mean I owe tax on the scholarships if there is no tuition to offset them? They are for tuition, so I was thinking I wouldn’t.
And now I have a new issue: Do I need to prove that not all the money for college expenses came out of the 529 to get the AOTC? I don’t see a place for that in Turbotax. The FAFSA was a piece of cake compared to this!
You’d have to prove it if you are audited, so just keep a record of where you used the 529 money and how the AOTC was from funds you paid with non tax benefited funds.
I think you will have to pay taxes on the ‘spring senior’ scholarships as there is no QEE to offset it if you used the tuition QEE for the previous tax year.
Perhaps it depends on the school. Our 1098-T for tax year 2015 showed all of the scholarships and grants for the current academic year, including those applied to the spring 2016 tuition bill, even though spring semester classes started on January 19th, 2016.
If by box 2 you mean box 2 of the 1098-T, that amount does not reflect tuition and fees that you paid. 1098-T box 2 is “amounts billed for qualified tuition and related expenses.” 1098-T box 1 is payments received. Of course, those amounts may or may not be the same.
@BelknapPoint, yes maybe it does depend on the school and how they handle it.
I should have used the word “might” instead of “would”.
My daughter’s school does exactly same thing - they want payment for Spring semester by December 1st but post their scholarship in January. For taxes I just match my payment with appropriate scholarships for the year when I paid. I am sure IRS is very familiar with this situation and does not expect anyone to pay tax on “non-existent” scholarship during student’s last semester in school.