I have read through your questions and the responses that have been provided. As @Hal_Al previously stated Box 5 of the 1098-T is not taxable income as long as it is used for qualified educational expenses.
All we can tell you is how the 1098-T is reported and what is allowed and what the rules for taxability are. I believe @Hal_Al has explained it clearly:
The simple rule is that anything in box 5 is tax-free if used for qualified educational expenses (QEE). Your QEE is shown in box 1 of the 1098-T. The difference between the two is taxable income (if box 5 is more than box 1). You may reduce the taxable amount by any other QEE you have, not shown in box 1. e.g. books.
If you feel that the information in Box 5 is incorrect, you need to check with the university office that issues the 1098-Ts and ask them what the amount in Box 5 represents. If your 1098-T was prepared incorrectly, then the university is the only one who can issue a corrected 1098-T.
For reporting requirements and whether or not it is taxable is based on whether or not the amount in Box 5 exceeds the amount in Box 1 and if so the difference is reported as income. The taxing requirement of Form 1098-T does not change because it was for something that is not taxable. If that is the case, then the form needs to be corrected.
