If the combined amount of the grants that is reported in Box 5 of the 1098 is more than the educational expenses reported in Box 1, it's taxable income, no matter how the grants are distributed. You can reduce the scholarship/grant amount by certain expenses to reduce your taxable income from the grants. Turbo Tax will address that in the program as you navigate through your educational expenses interview in Turbo Tax.
You don't have to change anything in the program other than adjust the taxable amount of the grants by certain expenses, such as room and board. This is only if your grants/scholarships reported in Box 5 0f the 1098 exceed your educational expenses for the year.
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