Form 1098T Tax implications

I am a retired parent with a child that is in college.  I have low income (~ $6000) from teaching singing lessons.  My child has a 1098T that shows $14,500 in box 1. $9900 in Box 4 and $41,000 in Box 5. The Box  1 amount  reflects the amount paid for  tuition.  Box 5 reflects the TOTAL amount of money provided.  I believe that the $26,500 ($41,000-$14,500) that was used for room and board is taxable income for my child, correct? Because the $26,500 is much greater than my income (~$6000) I fear that I lose the right to claim my child as a dependent nor can I claim Head of Household.  Am I correct?  Do I qualify for EIC? 

What do I do with the Box 4 data? 

Does my child have to file a tax return showing $26,500 as income?  

Even with the Standard Deduction for Single ($14, 600) my child would show $$7900 ($26, 500-$14,600) of taxable income and owe the IRS money.  Is this correct? I am shocked my child will have a tax liability.