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Returning Member
posted Feb 5, 2024 11:43:39 AM

can scholarships in excess of educational costs be reported as taxable income on the parent's (not the dependent's tax return

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2 Replies
Expert Alumni
Feb 5, 2024 12:05:49 PM

Scholarship income for the benefit of a student cannot be reported as income on the child's parent's return.

Level 15
Feb 5, 2024 1:33:20 PM

Q. Can scholarships in excess of educational costs be reported as taxable income on the parent's (not the dependent's) tax return?

A. No. And you wouldn't want to do it. Scholarships are a hybrid between earned and unearned income. It is earned income for purposes of the $13,850 filing requirement and the dependent standard deduction calculation (earned income + $400).  It is not earned income for the kiddie tax and other purposes (e.g. EIC).  For grad students and post grad fellows, scholarship, stipend and fellowship income is earned income ("compensation") for IRA contributions.

 

You do not report his/her income on your return. If it has to be reported, at all, it goes on his own return. If your dependent child is under age 19 (or under 24 if a full time student), he or she must file a tax return for 2023 if he had any of the following:

  1.          Total income (wages, salaries, taxable scholarship etc.) of more than $13,850 (2023).
  2.          Unearned income (interest, dividends, capital gains, unemployment, taxable portion of 529 distribution) of more than $1250 (2023)
  3.          Unearned income over $400 and gross income of more than $1250 (2023)
  4.          Household employee income (e.g. baby sitting, lawn mowing) over $2600 ($13,850 if under age 18)
  5.          Other self employment income over $432, including money on a form 1099-NEC

 

Even if he had less, he is allowed to file if he needs to get back income tax withholding. He cannot get back social security or Medicare tax withholding.

In TurboTax, he indicates that somebody else can claim him as a dependent, at the personal information section.

If his only income is from interest and dividends, Alaska PFD or capital gains distributions shown on a 1099-DIV, there is a provision for entering it on your return, using form 8814.