the parents income is too great for them to get a Tuition credit, but I am wondering how to report the following:

Box 1 - tuition is $40,000

Box 5 - Scholarship received is $45,000.  

Question - is the $5000 difference taxable and if so where is it reported on the tax return.

OR.... 

can that extra $5000 be treated as additional expenses for books, room and board

and NOT reported as addition income

Any one have thoughts on this?  

thank you