Why did my scholarships and my fellowships get added onto my earned income?

[JohnB5677]

If you receive a scholarship, a fellowship grant, or other grant, all or part of the amounts you receive may be tax-free. Scholarships, fellowship grants, and other grants are tax-free if you meet the following conditions:

• You're a candidate for a degree at an educational institution that maintains a regular faculty and curriculum and normally has a regularly enrolled body of students in attendance at the place where it carries on its educational activities; and
• The amounts you receive are used to pay for tuition and fees required for enrollment or attendance at the educational institution, or for fees, books, supplies, and equipment required for courses at the educational institution.

You must include in gross income:

• Amounts used for incidental expenses, such as room and board, travel, and optional equipment.
• Amounts received as payments for teaching, research, or other services required as a condition for receiving the scholarship or fellowship grant.
• However, you don't need to include in gross income any amounts you receive for services that are required by the National Health Service Corps Scholarship Program, the Armed Forces Health Professions Scholarship and Financial Assistance Program, or a comprehensive student work-learning-service program (as defined in section 448(e) of the Higher Education Act of 1965) operated by a work college.

Topic No. 421 Scholarships, Fellowship Grants, and Other Grants | Internal Revenue Service (irs.gov)

[Hal_Al]

The usual answer is: box 5 (scholarships) of your 1098-T was larger than box 1 (tuition & fees).  TurboTax will treat the difference as taxable income until you enter additional qualified expenses.

Even though the amount was entered on line 1 of form 1040 (wages), it is not treated as earned income.  Note the SCH code just to the left of line 1.

Taxable scholarship will not qualify you for the Earned Income Credit, additional child tax credit, or for an IRA contribution. 

Taxable scholarship is treated as earned income for the purpose of calculating a dependent's standard deduction.