Q. TT is treating my last semester scholarship from 1098-T as unearned income and shouldn't.
A. Taxable scholarship is unearned income.*
Q. TT has started form 8615 for this reason and I can't delete it. What am I doing wrong?
A. If you are under 24, and were a full time student for parts of 5 months (you were) and more than half you support, for the year, did not come from your earned income, you are subject to the kiddie tax, even if you cannot be claimed as a dependent. What you are doing "wrong" (and it may not be wrong) is answering the personal info questions so that you fit in that category.
*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, from which TT treats it as hybrid income
