For a college student with scholarship of $4000 (no service required), no tuition, and income of $4000, should I do separate filing for her or joint return together?

[limjtu]

We are also not sure if the scholarship is taxable and if it's unearned income. Thanks a lot!

[MargaretL · Accepted solution]

You should file jointly, as it is the most beneficial filing status for married taxpayers. The fact that your wife has small income will help your income (while file jointly) to be reduced by 'joint' deductions, which may increase your refund/ lower your tax liability. For a detailed comparison of both statuses, please click here.

As to the scholarship, it will be considered taxable income if it exceeds the tuition and other qualified expenses; otherwise it is not taxable. TurboTax will calculate it for you, once form 1098-T is entered, along with scholarship amount and education expenses. 

And your last question - scholarship is considered unearned income.