Q. A kid who is claimed dependent - their deduction is this, right?
"Dependents – If you can be claimed as a dependent by another taxpayer, your standard deduction for 2023 is limited to the greater of: (1) $1,250, or (2) your earned income plus $400 (but the total can't be more than the basic standard deduction for your filing status)."
A. Yes
Q. A kid who is not claimed as dependent has a 13,850 (for 2023) deduction, correct?
A. Not exactly. It's not whether the kid IS actually claimed as a dependent; it's whether he CAN BE claimed as a dependent. If you forego claiming your dependent, for whatever reason, he does not automatically get the full $13,850 standard deduction.
Q. Id the taxable portion of scholarships counted as earned income? \
A. Yes. The confusion comes from the fact that taxable scholarships are a hybrid between earned and unearned income. It is earned income for purposes of the $13,850 filing requirement and the dependent standard deduction calculation (earned income + $400). It is not earned income for the kiddie tax and other purposes (e.g. EIC). For grad students and post grad fellows, scholarship, stipend and fellowship income is earned income ("compensation") for IRA contributions.
Are scholarships above tuition counted as earned income? so so confused . . . still
