and a stipend she earned through the State for student teaching for high needs children.
Yes, that is considered self-employment income in her case because she actually went out and "did something" on a recurring basis to actually "earn" it.
"The conditions of the stipend "
Doesn't matter, because the conditions of the stipend was not a requirement of the college in order for her to obtain a degree or credentialed certification either. It also doesn't fall into any internship requirements necessary for the degree or credentialed certification she may be working towards.
Basically, it is self-employment income. Since it was more than $400 she is required to file a tax return and report it on SCH C as a part of her personal 1040 tax return.
"Turbo Tax is not taking this $4000 as part of her income which is used to figure her exemptions"
Exemptions don't exist anymore. All she gets if filing single is the $12K standard deduction, and that's it. But she will still pay the 15.3% of self-employment on the amount of "taxable" business income over $400. No way around that.
