Box 1 should report "What was paid to the school" not what was paid after scholarships. If that were the case, there would be no need for Box 5.
IRS required schools to report Box 1, although some schools were using Box 2. This change in reporting method may not have been handled correctly by the school.
We always encourage the Taxpayer to use their school account statement and double check the 1098-T. The entries can be adjusted in the TurboTax programs.
According to the IRS:
“Box 1. Payments
Received for Qualified Tuition and Related Expenses
Enter the total amount
of payments received for qualified tuition and related expenses from all
sources during the calendar year. The amount reported is the total amount of
payments received less any reimbursements or refunds made during the calendar
year that relate to the payments received for qualified tuition and related
expenses during the same calendar year. The
amount reported is not reduced by scholarships and grants reported in box 5.
Include in this box the receipt of a payment of past-due qualified tuition or
related expenses from a previous calendar year, but only if the educational
institution previously billed the student for such amount(s).”
https://www.irs.gov/forms-pubs/about-form-1098-t
