Lyrics ABOVE the stave

Take a look here:
http://musescore.org/en/node/23764

You can manually move the lyrics up (select, ddrag), works for existing lyrics (see Shoichi's reply), or use the Lyrics odd/even text styles to position them automatically, works only for lyrics yet to be entered (at least in 1.x).
Problem is that lyrics always reserve space below the staff, never above, regardless where they actually get positioned, so you may see lack of space above and too much space below.

Don't move the lyrics after entering. Rather, move where the lyrics get entered.

Create a two-stave score.
Enter SATB as Stave 1, Voice 1, S1V2, S2V1, S2V2
Now, go into Style -> Edit General Style -> Page and set the Lyric Upper Margin to -10.
To enter your Soprano lyrics, click on the first note then [Ctrl] l to start entering lyrics - and they will be entered above the stave.
To enter your Alto lyrics, go back and click on the first Alto note. Then press [Enter] 5 or 6 times to take you down below the stave.
When entering your Tenor lyrics you might find that there is a bit of a gap if the Tenor notes are mostly below the top line of the stave. In this case you enter you first "lyric" as [Ctrl][Spacebar] then press enter to take you down a line and start entering there.
Bass lyrics are entered like Alto lyrics, only on the bottom stave.