Thanks for your response @Hal_Al
"Yes. Because it is earned income for purposes of the standard deduction calc, the first 12,950 will not be taxed and the first $14,100 (12950 + 1150) will not be subject to the kiddie tax."
When I looked through TurboTax form 1040 it uses only the $12,950 std. deduction to calculate taxable income. Daughter has $2,250 on W2 earnings also. It sums her non-tuition scholarship (from 1098-T) & W2 earnings and then subtracts 12,950 to get taxable income. In form 8615 it uses only non--tuition scholarship income and then subtracts $2,300 (NOT $12,950) to get taxable income. The smaller amount from the two (obviously amount from form 1040, i.e., ~6k, which includes earned income) is what is added to parent's income. Tax on that amount is calculated vs. what has been paid by parent. Diff is what child has to pay. Quite a large amount for her. And she ends up paying tax at parent rate on her earned income also.
"There are two types of dependents, "Qualifying Children"(QC) and Other ..."
Based on your criteria below - although my daughter (under age 24 and FT student) is providing more than half (almost all) her support through the scholarship she is still a dependent because scholarship is excluded? To me that is against the spirit of fairness.
IRS does not allow IRA contributions on scholarship income. SO, Is there a way to reduce her taxes (or taxable income)? Based on your explanations I guess she CANNOT?
