EDIT: 2/1/2019: Effective with the 2018 Form 1098-T box 2 is *NO* *LONGER* *USED*. If you have anything in box 2, then it's ***WRONG***
On the 1098-T, either box 1 *OR* box 2 will have an amount in it. There will never be an amount in both boxes. If there are, then contact the BUSAR because they made a mistake.
Box 1 is the amount of qualified education expense that the college has received and "actually applied" to your qualified expenses.
Box 2 is the mount of qualified education expenses the college has "billed" you for, but as of the issue date of that 1098-T, the billed amount has not been paid. Or if it has been paid, then it just hasn't been credited yet.
Generally, when you have an amount in box 2 the program will ask you if you 'actually paid" that amount. From my experience with this, I've never known anybody to say "no, I didn't pay it". They always select "YES, I paid it" That's because qualified education expenses are claimed/deducted in the tax year they are paid. It flat out does not matter what year they pay *for*.
Remember, colleges work in academic years, and the IRS does not. So the reality is, it takes you five calendar years to get that four year college degree.
