why I am asking this question is, if it is earned income, and the student is not required to file tax return, then his income is not considered in caculation of premium tax credit of health insurance by marketplace. if it is unearned income, the student's income is included in household income, then the extra AOTC may not be worth that decrease of PTC.
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Scholarships are a hybrid between earned and unearned income. It is earned income for purposes of the $13,850 filing requirement ($14,600 for 2024) and the dependent standard deduction calculation (earned income + $400 ($450 for 2024)). 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.
Entering taxable scholarship income, in the income section of TurboTax (TT) , will report the income as unearned income on line 8z of Schedule TT can handle the dual treatment of the income.
Q. Will the student have to file tax return if students total income is $3500 work study + this $3000?
A. No, if the work study is reported as earned income too. He's under the filing threshold.
A dependent must file a tax return for 2024 if he had any of the following:
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.
Scholarships are a hybrid between earned and unearned income. It is earned income for purposes of the $13,850 filing requirement ($14,600 for 2024) and the dependent standard deduction calculation (earned income + $400 ($450 for 2024)). 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.
Entering taxable scholarship income, in the income section of TurboTax (TT) , will report the income as unearned income on line 8z of Schedule TT can handle the dual treatment of the income.
Q. Will the student have to file tax return if students total income is $3500 work study + this $3000?
A. No, if the work study is reported as earned income too. He's under the filing threshold.
A dependent must file a tax return for 2024 if he had any of the following:
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.
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