It sounds more like it's some of the earnings portion (box 2 of the 1099-Q) of the 529 withdrawal that's showing up on line 8z of Sch 1.
For more specific help. provide some numbers. 1098-T, boxes 1 & 5. 1099-Q boxes 1 &2. Total of non qualified expenses (qualified for the 529, but not the scholarship). Is the student your dependent. Does she have any other income (how much, from what sources). Are you eligible for the tuition credit (income not too high)
