Q. I assume claiming AOC is more beneficial although she has to pay extra income tax if the tax amount is not too much.
A. Yes. The AOC is 100% of the first $2000 of tuition and 25% of the next $2000. It would be rare, but depending on the numbers, you might only want to use $2000 for the AOC, rather than $4000.
Q. For post grad fellows, the scholarship income is always earned income? Or would it be still hybrid?
A. It's still a hybrid, but it's earned income for one additional item (eligibility for an IRA contribution). So. it's earned income for the standard deduction, the filing requirement and an IRA contribution; but not for the kiddie tax or the Earned income credit.
Q. For example, if the total stipend exceeds the standard deduction, would it be still considered as earned income so they could contribute to Roth IRA?
A. Yes.
