You would only enter the 1098-T in your TurboTax program if you are interested in getting an education credit.
Education credits are based on education expenses paid out-of-pocket.
If Box 5 is larger than Box 1, that would indicate an excess of educational aid, and thus taxable income for the student. The excess would only be reported on the students return. This can be done on the student's return under:
Deductions & Credits
Education
Expenses and Scholarships (Form 1098-T)
Enter only the excess under "Scholarships/Grants (for all schools)"
HOWEVER be aware that you can allocate MORE scholarship as income to the student(s) to free up expenses that you can then use for an education credit.
The Education Credit for you is often more than the tax for the student.
To do this, enter the 1098-T in your program and go through ALL the sections of the Education Interview until you get to "Maximize My Tax Break"
The program will suggest the best way to report the expenses/scholarships based on the information it has.
If you can allocate an additional 4,000 as income to each student, you may get the full American Opportunity Tax Credit.
That credit can be quite valuable.
Pub 970 has some great examples and is worth reading.
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