@Opus 17 said "It should be reported as a scholarship, or you can use "hobby" income in Turbotax, it is not self-employment on schedule C"
I agree (I also agree it's not all that clear). The way you enter scholarship income is:
Enter at Educational Expenses and Scholarships, under Deductions and credits (not the income section).
If the student does have a 1098-T, one of the follow-up questions, in the 1098-T interview, will be do you have any scholarships not shown on the 1098-T. Enter the additional scholarship/stipend there. At that 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.
Scholarships are a hybrid between earned and unearned income. It is earned income for purposes of the $14,600 filing requirement (2024) and the dependent standard deduction calculation (earned income + $450). 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. Taxable scholarship goes on line 8r of Schedule 1, causing TT to treat it as earned income for the standard deduction calculation for dependents.
This means that her income is under $14,600, so she doesn't need to file. You may want to file anyway to document the reporting of the 1099-MISC income, in case the IRS computers are looking for it.
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