I will not try to answer every question but instead give you some general guidelines. You can find more detail in IRS Pub. 970: https://www.irs.gov/pub/irs-pdf/p970.pdf
Scholarship income used for anything other than qualified education expenses is taxable on the student's tax return. What can be included in qualified education expenses can vary with the circumstances. They include tuition and certain fees. They can include books, supplies, and course related equipment if the student qualifies for the American Opportunity Credit. Qualified expenses paid in calendar year 2019 for both the fall 2019 term and spring 2020 term can be claimed on the 2019 tax return for the credit or to offset scholarship income. The student will receive a 1098-T from the school with qualified tuition and fees and scholarship received by the school shown.
If the student is claimed as a dependent and qualifies for the American Opportunity Credit, the parent can claim up to $4000 of qualified expenses not paid by scholarships but paid out of pocket or with loans for up to $2500 of credit. Any scholarship income in excess of what was used to pay for qualified education expenses, is taxable on the student's tax return. This would include income refunded by the school for unused scholarship income and all scholarship income that paid for non qualified expenses such as room and board, travel, and any other non qualified expenses. The taxable amount of the scholarships is reported on the student's tax return and not the parent's tax return. The student should be eligible for up to $12,200 of standard deduction on his 2019 tax return to reduce the amount of total income that tax must be paid on.
A worksheet 1-1 on p. 7 of Pub. 970 can be used to calculate how much of the scholarship income is taxable. The discussion of the American Opportunity Credit in Chapter 2 describes what expenses can be included in qualified expenses for a student who qualifies for the credit.
