Q. I thought any taxable scholarships should show up on line 1 (wages) with SCH written next to it to let IRS know it is from scholarships.
A. That's the old way (before 2022).
Q. Has TT treated the taxable scholarships correctly by putting it on Sch 1, line 8r?
A. Yes. It's very important that it goes there*. Note how scholarships now get a line to themselves.
Do not file a NC return. Scholarship income is NOT considered sourced to state where the school is located. Instead, it is considered sourced to the student's home state. There are exceptions where the states have written it into law, but NC does not appear to be one.
*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 (but not undergrads), scholarship, stipend and fellowship income is earned income ("compensation") for IRA contributions.
Taxable scholarship goes on line 8r of Schedule 1, from which TT treats it as hybrid income.
