stzollner
New Member

A graduate student has an NSF GRFP fellowship, which is reported by the university in box 5 of the 1098T. Is this earned or unearned income?

This sounds like earned income, like a graduate research assistantship, since the student is expected to work on the professor's research project. Turbotax thinks that this is unearned income and taxes it at the parents' tax rate (kiddie tax), similar to dividends and interest. Does that sound right? The fellowship was only in place for part of the year and may or may not have provided more than 50% of the student's living expenses.