Yes, that is true. It is taxable if it is used for anything other than tuition and qualified fees and qualified books and supplies. If you use the money just for spending money or for room and board, it is income to you.
If that is the case and you owe income tax, you enter the 1098-T into TT, and, because Box 1 is higher than Box 5, it will calculate your income tax on the excess - if the form is correct and you correctly enter other qualified expenses (which is very confusing in and of itself.
I'm totally confused about the rest when you shouldn't owe money, though! Hope I at least helped you.
