Your daughter's scholarship amount plus other earned income is less than the $12,200* "magic number" (standard deduction). Your son's is more. At that point it's best to switch to the 529 money being taxed, rather than scholarship. This was briefly explained previously.
You're not being difficult, it's the tax rules that are difficult. The devil's in the details, which sometimes doesn't seem to make sense. That's why tax preparation and software is a multi billion dollar business!.
*Technically the "magic number" is $11,850 (a dependent's std deduction is his earned income + $350).
(I don't see where the number $11014 came from).
12200 - 836 - 350 =11014
