Q. So you are saying since she is reporting this taxable scholarships as income, we should not be entering any deductions and credits (expenses) on her return?
A. Yes.
Q. Could you explain, why?
A. Because you effectively already enter all her expenses when you manually calculated the amount of taxable income ($22129-11250+ 4000-1913=12966) and entered it in the income section. You don't claim the education credit, on her return, because you claimed it on yours. You should enter nothing in the education expenses and scholarships section, on her return.
Entering the taxable scholarship in the income section was an alternate method you managed to find. TurboTax coulda woulda shoulda done that in the education expenses section.
