You should not enter scholarship income in the income section of TT, if you are a dependent or CAN BE claimed as a dependent. It will not handle it properly.*
Enter the 1098-T in the "Educational Expenses and Scholarships (1098-T)" section, under "Deductions and Credits". TT will automatically handle the difference between box 1 and box 5 as taxable income (if box 5 is more than box 1), unless you enter additional qualified expenses. There's a simple work around. Manually calculate the taxable amount of scholarship and enter the 1098-T, with 0 in box 1 and the taxable amount in box 5. Enter no other numbers.
Since you are not a dependent (and I assume can not be claimed as a dependent), you can enter it as other income. But, it's still best to enter it in the education expenses section, for proper reporting on Schedule 1. It will get taxed the same, in your case.
In TurboTax (TT), enter at:
- Federal Taxes tab (Personal in Home & Business)
- Wages & Income
Scroll down to:
-Less Common Income
-Misc Income, 1099-A, 1099-C
- On the next screen, choose – Other reportable income
- On the next screen, click yes
- On the next screen, you'll get blanks to enter the amount and a description. It will go on line 8z of Schedule 1 as "Other Income"
*Scholarships are a hybrid between earned and unearned income. It is earned income for purposes of the $14,600 filing requirement (2024) and the dependent standard deduction calculation (earned income + $450). 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.
Taxable scholarship goes on line 8r of Schedule 1 and must go there for proper handling of it's hybrid status.
