In TurboTax, you can enter the excess/taxable amount on the student's return by entering the 1098-T in the Education Section of the Student's return (under Deductions & Credits) , or only entering the amount the student needs to claim. This second option would be entered in the same section (Education) but you needn't enter the 1098-T, only the taxable portion of the scholarship amount as a scholarship.
Normally the 1098-T is used on the Taxpayer claiming the student to calculate an education credit, but if the scholarship exceeds the fees, there would be no credit. (Don't forget about Book and Supply expenses not listed on the 1098-T) So in this case (no credit) the 1098-T needn't be used by the Taxpayer claiming the student.
Yes, it is POSSIBLE to allocate expenses to scholarships and distributions from education savings account, to free-up expenses for a credit. For example, a scholarship could be allocated to Room and Board. Using Room and Board expenses would make the scholarship taxable, but the tuition expenses it "frees-up" could count for a credit. ( A Distribution used for Room and Board is treated differently. Room and Board expense DOES make distributions non-taxable)
As you say, if your Modified Adjusted Gross Income (MAGI) is 180,000 or over, you wouldn't be eligible for either Education Credit.
You can look over Pub 970 for more information.
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