Think of it this way. You are in school over a number of years and sometimes you will get a scholarship awarded to you in a year that is actually designated to pay for a different year of tuition.
Here is an example. Suppose you paid tuition expenses in 2018 of $4000 for the fall session. Your 2018 Form 1098-T would show tuition paid of $4000. Then in early 2019, your scholarship came through and you were awarded $8000, with $4000 to cover 2018 and $4000 to cover 2019. Then your 2019 Form 1098-T will show tuition of $4000, but scholarships of $8000. Therefore, you would enter that $4000 of that scholarship was reported in 2019, but not allocable to a 2019 expense. This will keep that amount from being taxable to you since the scholarship amount exceeded the tuition that was paid.
I understand the answer to the tax question, the 4,000 should not count because it was simply paid late, in 2019 and the tuition was due in 2018. But how does that go on a form? Thank you!
As you go through the Education section of your return and enter scholarship amounts, there is a question that comes up asking if any of the scholarship was not designated to pay 2019 expenses. If you answer 'yes', then you can enter the amount that will be disregarded for 2019.
How about in following years? Let's say on my 2020 return I recorded $4k in scholarships and $2k of it as "not allocable" to that year, intending to use it the following year (2021). Does that mean that on my 2021 return I have to record that $2k under "Other Scholarships/Grants/Fellowships" or somewhere else?