My son's college scholarship of $26,329 is being added as "income" even though we payed the $27,022 balance for tuition (not R

To clarify-

To assist you, we would need to know the numbers on the 1098-T as well as all other expenses and payments. 

If you are claiming a tuition credit, TurboTax (TT) has reduced the amount of tuition calculated to keep the scholarship tax free.  

For example $4000 of tuition is used to claim the American Opportunity Credit (AOC).  $27,022 - 4000 = 23,022 was effectively paid by tax free scholarship. 26,329 - 23,022 = $3,307 of the scholarship is taxable. Be sure to enter book and computer costs to reduce the taxable amount.

When asked  how much of the scholarship was used for room and board, TT will treat the amount you enter as taxable.