Do I have to fill out the form 8615 ("kiddie tax") in 2018 if I am a graduate student who received a taxable scholarship/fellowship?

[cameaf]

No, the kiddie tax applies if the only income you (as a child) had was investment income such as interest and dividends, including capital gains distributions and Alaska Permanent Fund dividends.  See link below that explains more about Form 8615:

https://ttlc.intuit.com/replies/3302004

[gls61]

Are you sure? I am trying to figure this out myself. The  instructions for form 8615 includes taxable scholarship in the definition of unearned income.  To me, that implies that if it is greater than $2200, then yes, it has to be on form 8615. Also, Turbotax is giving me an error indicating I need to complete form 8615. The only unearned income my son has is the scholarship. I have been googling and other tax info sites also say it is subject to the kiddie tax. I manually changed the 8615 form - changing the answer to the question about investment income greater than $2200 from yes to no, but that didn't help. The error came right back. 

[macuser_22]

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@gls61 wrote:

Are you sure? I am trying to figure this out myself. The  instructions for form 8615 includes taxable scholarship in the definition of unearned income.  To me, that implies that if it is greater than $2200, then yes, it has to be on form 8615. Also, Turbotax is giving me an error indicating I need to complete form 8615. The only unearned income my son has is the scholarship. I have been googling and other tax info sites also say it is subject to the kiddie tax. I manually changed the 8615 form - changing the answer to the question about investment income greater than $2200 from yes to no, but that didn't help. The error came right back. 

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Taxable scholarships are scholarships that exceed tuition (i,e, the 1098-T box 5 is more then box 1.  The taxable part would appear on the 1040 line 1 with "SCH" next to it.)

Per IRS Pub 17 page 201

https://www.irs.gov/pub/irs-pdf/p17.pdf

Unearned income defined. Unearned income
is generally all income other than salaries,
wages, and other amounts received as pay
for work actually done. It includes taxable interest,
dividends, capital gains (including capital
gain distributions), unemployment compensation,
taxable scholarship and fellowship grants
not reported on Form W-2, the taxable part of
social security and pension payments, and certain
distributions from trusts. Unearned income
includes amounts produced by assets the child
obtained with earned income (such as interest
on a savings account into which the child deposited
wages).

[Hal_Al]

Scholarship  income has a dual status, in taxes.  It is unearned income for most purposes, including the kiddie tax.  So, the original reply, above, is wrong. You do have to fill out form 8615 if you have more than $2200 of scholarship income. 

But,it is treated as earned income for purpose of calculating a student-dependent's standard deduction.  So scholarship income will not be taxed unless the student's scholarship (or total) income is more than $12,200.

[Carl]

I note you state this is for a twenty EIGHTEEN tax return. So your student status today doesn't matter. If you were an undergraduate on Dec 31 of twenty EIGHTEEN then the kiddie tax will apply if (and only if) your parent's qualified to claim you as a dependent on their own tax return. The key word here is *QUALIFY*. So it does not matter if your parents actually claimed you as a dependent on their 2018 return or not. If they "QUALIFIED" to claim you, then the kiddie tax will apply on any excess scholarship funds that were not used for the qualified education expenses tuition, books, and lab fees.

[Hal_Al]

@Carl  - A couple of "fine points":

1. You do not have to be an undergrad; just a full time student under age 24.

2. If you qualify as your parent's dependent, you are subject to the kiddie tax, but not ONLY if you qualify as their dependent.  The kiddie tax rule is: if you a full time student, under 24, and less  than half your support comes from your earned income (and you're not married or an orphan).

[Carl]

Thanks @Hal_Al I didn't mention the finer points only because it's not common for a graduate student to be under the age of 24. Typically your "Sheldon Coopers'" of the world don't do their own taxes. 🙂