Child is a FT student and has scholarship in part to pay tuition (she is a dependent and we pay for school). Is she supposed to be getting taxed?

[Hal_Al · Accepted solution]

Scholarships that pay for qualified educational expenses (QEE - tuition, fees, books and other course materials) is tax free.  Scholarship amounts that exceed QEE is taxable income, on the student’s tax return. Room & board are not QEE.

If box 5 of the 1098-T exceeds box 1, TurboTax (TT) will treat the difference as taxable income, unless you enter additional QEE at books and other expenses.

If you are entering the 1098-T, on your return, TT will advise  you that your student has taxable scholarship income to be reported on his/her return.  It will not (and should not) enter the taxable scholarship on your tax return.