Scholarships that pay for qualified educational expenses (QEE - tuition, fees, books and other course materials) is tax free. Scholarship amounts that exceed QEE is taxable income, on the student’s tax return. Room & board (R&B) are not QEE.
If box 5 of the 1098-T exceeds box 1, TurboTax (TT) will treat the difference as taxable income, unless you enter additional QEE at books and other expenses.
Since you know that some of the amount, in box 5, is taxable, because it was designated for R&B, you must tell TurboTax that. The way you do that is as ThomasM125 described. The good news is that that will free up some of the tuition so that you can use it to claim the Tuition credit.
