My 20 year old daughter is a dependent and a full time college student. Her only income is $4,000 reported on line 5 of form 1098-T. IRS publication 501 table 2 states that scholarships are earned income and based on the guidelines, she does not have to file a return.
I am confused since the Turbo Tax income section "Less Common Income" asks about Childs Income and the More Info button states that scholarships are unearned income with the guidelines showing that she would have to file a tax return (since her $4k scholarship is more than the $1,100 limit).
To give more information, the 1098-T has over $9,000 in box 1. We also have a 1099-Q from a 529 plan distribution with $4,000 reported in box 1. So, the scholarship and the distribution together are still less than the qualified education expenses in box 1 of the 1098-T. In previous years, there was no scholarship and I had input the 1098-T on our (parents) tax return and used the AOTC. We do claim her as a dependent. Does she have to file a return? And are we still able to use the 1098-T on our return and claim this education credit?
