Q. I think it is supposed to be reported on line 8r "Scholarship and fellowship grants not reported on Form W-2". Does it matter if it is reported on 8z instead?
A. Maybe. Anything reported on line 8z is classified as unearned income. Scholarships are a hybrid between earned and unearned income. It is earned income for purposes of the $12,950 filing requirement and the dependent standard deduction calculation (earned income + $400). It is not earned income for the kiddie tax and most other purposes (e.g. EIC) For grad students and post grad fellows, it is earned income for the purpose of IRA contributions. TT can handle the dual treatment of the scholarship income.
