Hal_Al
Level 15

Education

Taxable scholarship income gets special treatment. It is earned income for purposes of the dependent filing requirement and calculation of the dependent's standard deduction (earned income + $350 but no more than $12,400).  That's why it goes on line 1 of form 1040, but with the notation SCH.

 

It is unearned income for purposes of the "kiddie tax", earned income credit or eligibility for an IRA contribution.