1. The program takes the difference between Box 1 and Box 5 (as well as other entries you may make) to determine the taxable amount.
You can enter the 1098-T into the student's TurboTax program if you are not applying for an education credit.
Don't forget to add expenses that are not listed on the 1098-T, such as books and supplies. Most students require internet access, and that also would be an education expense. The program does the math and calculates the income.
2. Income from the scholarship will adjust the dependent's Standard deduction. In your situation, there should be no tax due.
3. In the situation you describe, with the student only reporting 2,500 scholarship income, there should be no tax due and therefore no Kiddie Tax.
[Edited 03/13/2024 I 3:32 pm PST]
@HR67
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