TT is correctly generating form 8615. Taxable scholarship is a "hybrid" income. It goes on line 1 of form 1040 (with wages) but with a notation (SCH on the dotted line to the left). Scholarship is treated as earned income for the purpose of calculating the student's standard deduction (note that she gets the full $12,550). But scholarship income is unearned income for purposes of the "kiddie tax" (form 8615).
Scholarship income should be entered in the education expenses section of TurboTax, not the wages and income section.
