My college-attending daughter had $750 of earned babysitting income in 2022 (no W-2 or 1099-MISC). While she is still a dependent, we are expecting she would need to file so that she can account for/contribute these funds to her ROTH IRA. In addition to her $750 earnings, distributions from our state 529 (OR) were sent directly to her university so the 1099-Q is listed in our daughter's name / SSN. The 1098-T received from her university demonstrates that the total tuition paid was in excess of scholarships received ($23K) + the amount of the 529 distribution, even without room and board documented.
Because the 1099-Q was sent with daughter's SSN, it sounded as though we should include the 1099-Q on daughter's return but, after including both sets of info in our daughter's return (inputting 1098-T details during step-through process after inputting 1099-Q distributions), TurboTax is showing the full $23K of scholarships as taxable income on her return, despite the tuition exceeding the amount of the scholarships + 529 distributions. I was under the impression that, if scholarships were applied to the tuition and not in excess of the total, they would not be taxable. Any advice as to which returns should incorporate/include this info within our / our daughter's returns (including confirmation of whether daughter even needs to file) would be gratefully appreciated.
