The expenses in Box 1 can be applied for a credit or to offset assistance, such as a scholarship.
Scholarships can be applied to education expenses, or possibly claimed as income.
The IRS gets a copy of the 1098-T and if they see a larger amount in Box 5 than Box 1, they will expect that student to claim additional income.
The 1098-T is entered into the TurboTax program so that the tax, if any, or credit, if any, can be computed.
The 1098-T itself is not entered onto the 1040, it is used for worksheet computation to report income and/or credits on the 1040.
https://ttlc.intuit.com/replies/4194409
CLICK
HERE for IRS Pub 970 Tax Benefits for Education
