On the 1098-T, if box 5 exceeds box 1 ***AND*** the school sent the student a check for the difference, then it's taxable income to the student.
If the school did not send a check to the student for the difference, then that means the school held the excess scholarship to apply to 2020 qualified expenses. In that case, the excess is *not* taxable income to the student. You just indicate on the return (where it asks) that some of the scholarship was/is applied to the next calendar year expenses. Then the program will ask for the amount of excess that gets 'carried over" to 2020. You enter that amount, and it's not taxed.
If this is your case, then it's up to *YOU* to remember this when you file your 2020 taxes next year. That's because the scholarship carry over amount will *NOT* be included in box 5 of the 2020 form 1098-T, but it *will* be included in box 1 of the 2020 form 1098-T.
