Q. How would I find out how much of her scholarship had that "condition/rule"?
A. Most scholarships do not have that rule, so the simple answer is: if you don't know that it does have that restriction, it doesn't.
Q. Additional income-it has to be reported on "kiddie taxes" form. So do you end up paying taxes for the portion above $2200.
A. No. Scholarship's income classification is convoluted. It is is unearned income for purposes of the kiddie tax, but earned income for purposes of calculating the standard deduction. So, as long as the student's total income is less than $12,200, he/she will not pay any income tax.
TurboTax handles this well, if you get the scholarship income on line 1 of form 1040. That's why it's important to enter scholarship income in the deductions and credits/educational expenses section and not in the income section.
