Q1) How to determine if the travel stipend is scholarship or not? It was labeled as "travel stipend" on the statement I received from my college but I do have to apply to get it?
A1). There are no firm rules. The usual rule is "stipend" is reported as taxable scholarship. The school should not have issued a 1099-NEC (that's the worst way to report it).
Q2) If I follow the steps to report it as scholarship and fellowship grants not reported on W2 (amount shown on schedule 1, line 8r), do I still need to enter the amount from 1098-T on my return, even though my parents have already entered the 1098-T on their return?
Q2). No. Entering the 1098-T, on you return, is not recommended. Schedule 1, line 8r is the correct place to report the income. See below, for how.
Q3) If the travel stipend is not considered a scholarship, does it automatically become taxable unearned income?
A3). No, it's not automatic. Schedule 1, line 8z is unearned income. Schedule C is an alternate way to report it and would be earned income, subject to Self employment tax, but open to deducting expenses (which may have been the reason for reporting it on a 1099-NEC, but still wrong)
Q4) Am I subject to the kiddie tax regardless of which way I report it?
A4). Yes (unless you use Schedule C). But, 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).
Q5) A step-by-step tip/instruction on how to enter into TurboTax will be very much appreciated.
A5). Enter at Educational Expenses and Scholarships, under Deductions and credits (not the income section).
After answering no to having a 1098-T*, answer yes to qualifying for an exception (that gets you to the entry screens). You will have to go thru the whole education interview to get to the scholarship screen. At the scholarship screen, enter the amount of the grant. When asked if any was used for room and board, answer yes. Then enter the amount you want to be taxable (usually all of it), in the pop up box. R&B are not "qualified educational expenses". So, this is how you tell TT that it is taxable. Note the wording at that screen “or other expenses”. You didn’t have to literally use the scholarship for R&B. This will put it on line 8r of Schedule 1.
*If you do have a 1098-T, one of the follow-up questions will be do you have any scholarships not shown on the 1098-T. Enter the additional scholarship/stipend there. But, since your parents are claiming the 1098-T, actually entering the 1098-T, on your return, can get messy (theoretically TurboTax can handle it)
