Yes, that sounds correct. My son is paying tax on the portion of his scholarship that covers room and board and exceeds $6350. The tax is based on our tax rate.
Note that TurboTax also inadvertently assumed a tax penalty for underpayment of estimated tax. When I dug deeper into the worksheet, TurboTax had not checked off that my son had no tax liability for 2016 - TurboTax had not asked me this question in any of the interview questions. When I corrected the worksheet to show he had no 2016 tax liability, it removed the penalty. I believe it is very important to go through all line items and worksheets to understand how your taxes are computed because TurboTax misses things such as this.
