1. All scholarships count but are they taxable only to the extent they were not used for education expenses. The IRS says in Publication 970 (2020), Tax Benefits for Education | IRS:
A scholarship or fellowship grant is tax free only to the extent:
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It doesn't exceed your qualified education expenses;
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It isn't designated or earmarked for other purposes (such as room and board), and doesn't require (by its terms) that it can't be used for qualified education expenses; and
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It doesn't represent payment for teaching, research, or other services required as a condition for receiving the scholarship. For exceptions, see Payment for services, later.
2. I don't understand the 1098-T not having half time marked. You may want to double check that courses were not dropped or contact the bursar. Same IRS pub says:
Half-time student:
A student who is enrolled for at least half the full time academic workload for the course of study the student is pursuing, as determined under the standards of the school where the student is enrolled.
3. 4 years AOTC per student. See Appendix B of the above pub for all the education options and handling.
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