Hello @Hal_Al
You wrote: "There is an alternative: have her claim the $3834 of scholarship as taxable income**. That reduces the $1782 to about $204. Saves about $140 in tax. It may get a little tricky entering in TT, but I think I can walk you through it."
I need your help please to accomplish this as everything I tried increased the student's tax liability.
In student's tax return: Before, with her existing taxable income of $1782, she owed $96 in Federal taxes. Then I added "other income" of $3834 and accordingly responded that I have already reported her scholarships in the income section (to zero it out) and now she owes $320 in Federal taxes! So clearly I am not doing this right.
TIA for any help you can provide.
UPDATE: I think I figured it out. I will create a new reply once I am confident, for you to review please. Thanks.
