@nagrath said "If it helps, here are the answers to your questions"
Yes, it helps, if you have an idea of the outcome, to know if TT is doing it correctly.
Caveat: I only did the math once, did not check it
You have $ 61861 + 16257 + 1452 = $79,570 of Qualified Ed expenses (QEE)
You have $79,570 - 4000 - 1403 = $74,167 of Adjusted Qualified Ed expenses (AQEE)
$77,730 - 74,167 = $3563 shortfall in QEE for the 1099-Q
3563 / 77730 = 4.58% of the earnings (box 2 of the 1099-Q) are taxable
0.0458 x $38,291= $1755 Taxable income on line 8z of Schedule 1 (Expected TT outcome)
What if you make the scholarship taxable? None of the $1403 will actually get taxed because of the increase standard deduction (explained in previous reply).
$79,750 - 4000 = $75,750 QEE
77,730 - 75,750 = $1980 Shortfall
1980 / 77730 = 2.55% of earnings are taxable
0.0255 x 38,291 = $975 Taxable income on line 8r of Schedule 1 (Expected TT outcome)
$1755 - 975 = $780 difference in reportable income. The kiddie tax will apply ($93 savings at 12%, $171 at 22%).
Entering in TT gets a little trickier (show the scholarship as being used for room & board).
The fact that NYS TAP stands for Tuition assistance program might indicate that it is restricted. But, a cursory Google search seems to indicate that any "cost of attendance" (including R&B) qualifies.
