The excess Scholarships are her income, and since she is filing her own tax return she will enter the $2700.00 above in TurboTax to be reflected on her tax return as if it were wages.
- Go to Federal Taxes> Wages and Income
- Scroll to the Less Common Income section and choose Miscellaneous Income (the last choice)
- Choose Other income not already reported on a Form W-2 or Form 1099
- Answer Yes on the Other Wages Received screen
- Continue past Wages Earned as a Household Employee and Sick or Disability Pay
- Answer Yes on the Any Other Earned Income screen
- Choose Other on the Enter Source of Other Earned Income screen
- Enter your scholarship information on the Any Other Earned Income screen.
This will report your scholarships on line 7 of your Form 1040, and you will not be subject to Self Employment Tax. Additionally your daughter will not be able to report the 1098-T on her return. The 1098-T will be reported on your return for Education Credit Purposes as she is your dependent. Remember that Good Record-Keeping is the key. Keep track of and properly account for all of the income and Education Expenses. Having digitized copies is a good idea especially with the advent of free cloud space with companies such as Microsoft and Google.
