the scholarship in the interview becomes a taxable scholarship, you must claim that portion was used for those items, so that becomes unearned income subject to kiddie tax.scholarship income is a strange thing, it is earned for some calculations such as to open an IRA (note a roth IRA is a great investment for the long term for your student to start) and unearned for others such as kiddie taxes.
You don't actually ignore the costs.... you need to go through the interview in the forms. The cost is ignored for the student determining their support as in he doesn't get to claim that he provided those costs of support. The question for the AOTC and kiddie tax is if the student provided over half their support, not if you did (to claim your child, you don't have to provide over half their support, for them to claim themself though they do). So simple let's say costs all add up to $25k, he would have to have earned income of minimally $12,501 and that does NOT include the scholarship income. <a rel="nofollow" target="_blank" href="
https://www.irs.gov/pub/irs-pdf/i8615.pdf">https://www.irs.gov/pub/irs-pdf/i8615.pdf</a> do the worksheet for support. Support. Your support includes all amounts spent to provide
you with food, lodging, clothing, education, medical and dental
care, recreation, transportation, and similar necessities. To
figure your support, count support provided by you, your
parents, and others. However, a scholarship you received isn’t
considered support if you’re a full-time student. For details, see
Pub. 501, Dependents, Standard Deduction, and Filing
Information.
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