The answers to your questions are shown below. I've also included the rules for a Qualifying Relative, which must all be met to claim another person who may or may not be related to you.
- If the scholarships and/or grants are not taxable to the potential dependent they are not counted as funds provide for support. They do have to be counted if they are taxable, in which case they would be funds provided from the dependent's own sources. And if a scholarship or grant is for a nonchild, for purposes of the support test, the scholarship exclusion does not apply to a nonchild. This means that in your case, because this person will only meet the Qualifying Relative dependent rules, you must include the scholarships as part of the support provided by the child. It cannot be ignored.
- The money provided by you is not income provided by the dependent, and is not considered nontaxable income of the dependent. These are funds you provided for support. Likewise, money provided to the dependent by the parents is considered support provided by a third party.
- Expenses for the entire household are entered in this section, then they will be divided by the number of people living there to determine the dependent's share. It is correct to add all household expenses for the year.
Qualifying Relative:
You provided more than half of their support.
They made less than $4,050 in gross taxable income. (Social Security income generally doesn’t count here.)
They live with you (365 days in the year) or they are related to you.
They aren’t a dependent on someone else’s taxes.
They aren’t doing their taxes with a spouse (married filing jointly).
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They are a U.S. citizen, resident alien, national, or a Canadian or Mexican resident.
You can’t claim a dependent if you are a dependent on someone else’s taxes. Use the link here for more information. Rules for Claiming a Dependent on Your Tax Return
[Edited: 02.06.2018 | 5:17 AM]
