Scholarships are a hybrid between earned and unearned income. It is earned income for purposes of the $12,400 filing requirement and the dependent standard deduction calculation (earned income + $350).. It is not earned income for the kiddie tax other purposes (EIC. IRA contributions or additional child tax credit).
Taxable scholarship goes on line 1 of form 1040 with wage earned income. TT can handle the dual treatment of the income.
Instead of entering it at the 1099-Misc screen, enter it at educational expenses. After entering the 1098-T, you will be asked if you had any scholarships not reported on the 1098-T. Enter there. When asked how much was used for room & board and other expenses, enter the 1099-Misc amount. That makes it taxable.
