No, you’re not doing anything wrong – this counts as income.
When your reported scholarships or grants amount (Box 5)
exceeds the amounts billed for qualified tuition and related expenses (Box 2), the
difference must be reported as taxable
income on your federal return. TurboTax
is performing this calculation for you.
For more information, see “Worksheet 1-1, Taxable
Scholarship and Fellowship Grant Income” on page 7 of IRS Publication 970, Tax
Benefits for Education.
