I used a bad word, earlier. Taxes are not "simple".
If you believe this is earned income (and you do have some mild support from that IRS link), here's the work around to enter it as earned income on line 1 of form 1040:
This is how to enter earned income without a W-2:
- Select Federal on the left side menu.
- Select Income and Expenses toward upper left.
- Expand/ scroll down the list and find the section called, Less Common Income.
- Scroll all the way down and select Miscellaneous Income, 1099-A, 1099-C.
- Select Other income not already reported on a Form W-2 or Form 1099
- Answer the first question Yes.
- Click Continue until you get to the page titled, Any Other Earned Income?
- Answer Yes and click Continue.
- Select Other and click Continue.
- Enter a description and amount on this page, click Continue.
I think you'll actually be waiving two red flags at the IRS; one for the earned income on line 1 and a bigger flag for a full time student, under 24, claiming the refundable portion of AOTC. For your situation, "get in trouble" only (usually) means a delay in your adjusted refund or more likely paying money back, sometime in the future, if the IRS disagrees.
