Thanks Carl. I partly ask because we are trying to decide if we have to claim her and what is the best way to go about it. When we read the IRS rules about whether or not she needs to file found here, <a rel="nofollow" target="_blank" href="
https://www.irs.gov/publications/p929/ar02.html#en_US_2016_publink1000203738">https://www.irs.gov/pu...>, it was unclear what the scholarship excess was considered. When we ask H&R we were told it was neither earned income or unearned income and that she should get $1000 education credit (which didn't make sense to us, hence the asking my question on here).
So is the excess scholarship (she is above $6300) considered unearned income? The tax rules in Pub929 say that unearned income under the amount of $10,500 can be claimed on the parent's tax return with a warning that part will be taxed at the parent tax percentage. That is why we were looking for the spot to claim her information on our returns. It's looking like if she is filing her own and says she can be claimed, whether we claim her or not, she'll be taxed at our rate anyway. So it would make sense just to claim her as a dependent and report her scholarship on our return to start with rather than have her file her own taxes.
Secondly, Her scholarship pays all her expenses, so is she really eligible to be claimed as a dependent? We've been told that we can't count the scholarship money towards the rule "Support. Your child's support includes all amounts spent to provide the child with food, lodging, clothing, education, medical and dental care, recreation, transportation, and similar necessities. To figure your child's support, count support provided by you, your child, and others. However, a scholarship received by your child is not considered support if your child is a full-time student. For details, see Pub. 501, Exemptions, Standard Deduction, and Filing Information." But I don't pay her support either, so do I have to say she can be claimed still?
If we are claiming her and she does have to file, do we have to file the 8615 or does she file that?
