My 21 year old college student worked on campus and received a W-2 with 3,500 in box 1 and no withholdings. She also worked as an intern during the summer to earn course credits. The internship paid her $4,000 and sent her a 1099-misc. What is the most effective way of entering this in Turbo Tax.
Q. What is the most effective way of entering this in Turbo Tax.
A. Enter the 1099-Misc as a stipend.
Enter at Educational Expenses and Scholarships, under Deductions and credits (not the income section).
After answering no to having a 1098-T*, answer yes to qualifying for an exception (that gets you to the entry screens). You will have to go thru the whole education interview to get to the scholarship screen. At the scholarship screen, enter the amount of the grant. When asked if any was used for room and board, answer yes. Then enter the amount you want to be taxable (usually all of it), in the pop up box. R&B are not "qualified educational expenses". So, this is how you tell TT that it is taxable. Note the wording at that screen “or other expenses”. You didn’t have to literally use the scholarship for R&B. This will put it on line 8r of Schedule 1 (this line is new for 2022-3).
*If you do have a 1098-T, one of the follow-up questions will be do you have any scholarships not shown on the 1098-T. Enter the additional scholarship/stipend there.
Scholarships/fellowships/stipends 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.