After entering the 1098-T, you will reach a screen that will asked if any of the scholarship was used for room and board (R&B), answer yes. Then enter the amount you want to be taxable (usually the difference between boxes 1 and 5), in the pop up box. R&B are not "qualified educational expenses" for tax free scholarship. So, this is how you tell TT that it is taxable. Note the wording at that screen “or other expenses”. You didn’t have to literally use the scholarship for R&B. This will put it on line 8r of Schedule 1.
Scholarships are a hybrid between earned and unearned income. It is earned income for purposes of the $15,750 filing requirement (2025) and the dependent standard deduction calculation (earned income + $450). It is not earned income for the kiddie tax and other purposes (e.g. EIC). For grad students and post grad fellows, scholarship, stipend and fellowship income is earned income ("compensation") for IRA contributions.
