TurboTax gives daughter $1,050 as standard deduction. I looked at the standard deduction worksheet for dependent children and followed the IRS instructions. She should be receiving the $12,000 deduction. The instructions specifically say in the case of this worksheet, taxable scholarship money should be treated as earned income. TurboTax must be counting it as unearned in order to get the $1,050 number.
You have to carefully enter the Scholarship income. It must show on line 1 of form 1040, with the code SCH, and not Line 21, Schedule 1 (other income). Do not enter it at income, in TurboTax. Enter it at the educational expenses section of the program.
Type> scholarship income <in the find box. Then "Jump to".