@vmi9d3 Communicating correct information to you has become a bit of a challenge now, with all the other add-on posters in this thread. No two have the same exact situation and it's taking time to sort through all the post.
For one semester of the calendar year 2019 his room and board were listed on the Bursar bill, so I can easily calculate it, for the 2nd semester he lived off campus in a rental apartment.
The off campus room & board was not paid with any of the scholarship amount included in box 1 of the 1098-T. Remember, box 1 only includes money paid directly to the college for qualified education expenses. Therefore, not one penny of the off campus rent, utilities or food was paid for with the scholarship amount included in box 1 of the 1098-T.
There's three possible scenarios I see here.
Box 1 - $10,000
Box 2 - $27,000
Scenario #1:
The student received a check from the school for the amount of $17,000. At this point, considering the amounts on the 1098-T only (not taking into account books, not included in box1) the $17,000 is taxable income to the student. Hands down, end of that part of the discussion.
The student logs into their online college account, and in their financials section they see that none of the scholarship money included in box 1 was used for R&B. Not a single penny. The checked the student received for $17,000 is taxable income to the student.
Scenario #2:
Same as above reported on the 1098-T. The student received a check from the school for $12,000. So with that added to the $10,000 in box 1, it only comes to $22,000. The $5000 difference was kept by the school for R&B. Therefore you report that $5,000 of the scholarship was used for R&B.
Scenario #3:
Box 1 - $15,000
Box 5 - $27,000
Student received a check from the school for $12,000. Have the student log into their online college account and go to their financials section. There you see where $10,000 of the scholarship was applied to various classes. Then another $5000 was applied to R&B. You report that $5,000 of the scholarship was used for R&B.
That means the check the student received for $12,000 plus that $5,000 (which totals $17,000) is taxable income to the student.
Your off campus R&B was not paid with any scholarship money, because you don't see any application of that scholarship money to the off campus living expenses, anywhere in the student's on line college account in the financials section of their account. It's an out of pocket expense any way you look at it. That out of pocket expense for R&B is not reported anywhere on any tax return.
