TurboTax (TT) automatically treats the difference between box 5 and box 1, of the 1098-T as taxable, if the box 5 amount is larger than box 1.
Another possibility is that TT is assuming the parents are using some of the box 1 tuition to claim an education credit. This would reduce the amount of tuition allocable to the tax free scholarship (vocational rehab money).
More info is needed.
