1098t for student return

[Chris R]

I'm doing the return for a student but not the parents.  He came in with girlfriend and her family.  The kid gets a 1098t with amount in box 1 which is $9000 less than the amount in box 5.  So I look at the Bursars office info and from that I see that he actually was billed in 2016 for about $7000 in tuition and they recorded payments in 2016 of about $10000 all coming from scholarships and grants.  If I were doing mom and dads returns I would be looking to see how I can maximize the credits and I would make as much of the grants taxable and go through that whole process, but I am not.  So my quandary is this taxable grant is of course reducing his refund from his small job. And he doesn't understand why the grants are taxable since he used them all for tuition and in fact took out loans to pay for living costs. We are not talking big dollars but to him it is a lot.  I guess my question is if the IRS is saying these 1098Ts are inaccurate and they are basically ignoring them do we need to report this.  We are not taking a credit on his return.  It seems that this is a timing issue and he really did not get excess grants they just aren't recorded in the same year because of the way the school reports them.  Any thoughts would be greatly appreciated.  Thank you.  

[grmy2h]

Were the scholarships and grants limited to tuition? Maybe he used them for R & B and used the borrowed funds for tuition.

[Chris R]

 Most of them are required to be used for tuition.  The Pell grants and Cal Grant Bs are not but saying they are for R & B just makes them taxable which is what I was trying to avoid.  Thank you for replying though.