sevans516
New Member

What can be counted as income? Can Student Pell Grants count as income? If I earned money on the side how do I report that as income?

 
Carl
Level 15

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All income from all sources is income. Weather it's reportable or not, and taxable or not, is another story.
Scholarships and Grants are reportable income, but they are not EARNED income. That can matter for some things, such as the EIC. Scholarships and Grants are treated as taxable income *initially*. But their taxability is offset by the qualified education expenses they are used to pay for.
When working the support issue, scholarships and grants, along with 529 funds reported on a 1099-Q do not count as income for the self-support. In other words, if your sole source of income for the year was scholarships and grants, and you had enough left over after paying qualified expenses to support yourself for the year, then that income does not count for you supporting yourself because you did not physically earn it. So when asked if you provided more than 50% of your own support, the only correct answer to that question would be NO.
Hal_Al
Level 15

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All income is taxable (and reportable) unless specifically exempt (like welfare, gifts and VA benefits). But only Earned Income is eligible for the refundable credits, like the EIC and Additional Child Tax credit.

Scholarships and grants that pay for qualified educational expenses are not taxable. Grants that pay living expenses are taxable, but they are not earned income and will not get you any money from the IRS.

Money "earned on the side" is taxable and most likely earned income. The IRS considers undocumented cash income (no W-2 or 1099-MISC), for work performed, to be self employment income. Enter at "Business Income & Expenses" and TurboTax (TT) will complete Schedule C or C-EZ for you and allow you to deduct any expenses associated with this income. You'll also have to pay self employment tax (social security) on any profits greater than $400. You report the income from your own records.
Carl
Level 15

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Thanks Hal_Al. I like the way you worded it. Much better than how I did it.