Good question. Earned income does not have a special tax rate, although it sometimes appears that way. Scholarships and earned income are both "ordinary income" and taxed at the regular bracket rates.
So, yes it is just income like his summer job*, for the purpose of income tax rate.
It's important how you enter the scholarship, in TurboTax, to get it to count for the standard deduction**. You must enter it at the education expenses section***, not the income section.
*Unlike the summer wage job, the scholarship is not subject to FICA (social security and medicare) tax.
**A dependents standard deduction is limited to the higher of $1050 or his earned income +$350 (but no more than $6350). Scholarships are "earned income" for this purpose.
***If you are not claiming educational expenses, there is an alternate way to enter scholarship, in TT. In TurboTax (TT), enter at:
- Federal Taxes tab (Personal in Home & Business)
- Wages & Income
- “I’ll choose what I work on” Button
Scroll down to:
-Less Common Income
-Click "Visit All". You'll eventually reach a screen to enter the scholarship amount. (this option is not available in TT Online)
