I received a 1098-t from my college. When I included it I went from a 325 return to owing 400. Do I have to pay taxes on scholarships used for tuition?

[Hal_Al]

Q. Do I have to pay taxes on scholarships used for tuition?

A. No. 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.

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. Room and board are not qualified expenses. 

Sometimes TurboTax (TT) will allocate some of the tuition to the tuition credit.  If you aren't eligible for the tuition credit, TT may assume that some of the tuition was used by the parent's on their return. In the interview, you should encounter a screen titled “Amount Used to Calculate Education Credit”, verify the amount you want to use or change it.