The SCH 785 on line 7 of your Form 1040 or 1040A means that you had $785 of taxable scholarship income. That income is added to the wages from your W-2s (if any) and the total is reported as wages on line 7. Scholarship income is taxable when it is used for something other than tuition and fees. The Form 1098-T that you got from your school might show a scholarship amount in box 5 that is higher than the amount of tuition. For more details about what scholarship income is taxable, see the FAQ at the link that epo39b posted above.
