You do not fill out form 8863; TurboTax (TT) fills it out for you based on your inputs, including answers to interview questions.
"TT is using the entire 1098T (box 1) value, instead of the $1750 out of pocket." TT should not use the box 1 amount, but it should use $4000 to get you the maximum American opportunity credit (AOC).
Go through the entire education interview until you reach a scree titled "Your Education Expenses Summary". Click edit next to the student's name. That should take you to a screen “Here’s your Education Summary”. Click edit next to “Education Information”. When you get to the screen titled “Amount Used to Calculate Education Deduction or Credit”, verify the amount you want to use or change it.
