Turboxtax says I have "unearned income" based off of my 5,500$ scholarship from my university. I thought this doesnt count as unearned income?
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Earned income is what you receive from actively working. It includes wages, salaries, and self-employment income. Unearned income is from anything other than work, unemployment, retirement, investments, etc.
Taxable scholarship income is an odd case. It's treated as earned income for some purposes and as unearned income for other purposes. Taxable scholarship income is considered earned income for determining whether a dependent is required to file, and for calculating the standard deduction for a dependent. Taxable scholarship income (that is not reported on a W-2) is considered unearned income for calculating the additional child tax credit, earned income credit, and kiddie tax.
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