How do I report non taxable income listed in box 14 of my w-2 in turbo tax? The portion was used for tuition for a grad student position.

TurboTax (TT) is doing it correctly.  $21,529.96 is her reportable income. Box 14 is only informational. It does affect the income or tax calculations.

By law your employer can only give you $5250 maximum, tax free. If you got more than $5250, the amount above $5250 is usually already included in box 1 of  your w-2 and you do not need to enter anything additional on your tax return.   The employer may or may not provide additional info in box 14.

Since you have essentially paid tax on that part, it  is considered your after tax money and that amount can be used  to claim the tuition credit.