Is a student stipend to cover travel and housing costs for a summer internship (reported on 1099 misc box 3) considered unearned income for purposes of the kiddie tax?
Sign Up

Why sign in to the Community?

  • Submit a question
  • Check your notifications
or and start working on your taxes
Announcements
TurboTax has you covered during Covid. Get the latest second stimulus info here.
cancel
Showing results for 
Search instead for 
Did you mean: 
New Member

Is a student stipend to cover travel and housing costs for a summer internship (reported on 1099 misc box 3) considered unearned income for purposes of the kiddie tax?

 I reported it as "SCH" on line 7 1040 per IRS pub 970.  Turbotax then generated form 8615 kiddie tax which would tax this at the parents' rate. Doesn't seem right.  It's not investment income. 

3 Replies
New Member

Is a student stipend to cover travel and housing costs for a summer internship (reported on 1099 misc box 3) considered unearned income for purposes of the kiddie tax?

The kiddie tax applies to all unearned income of dependents, not just investment income. See below for an explanation.

https://ttlc.intuit.com/replies/3301446

The kiddie tax only applies to amounts over $2,100. The FAQ below explains how to report it.

https://ttlc.intuit.com/replies/3302004

New Member

Is a student stipend to cover travel and housing costs for a summer internship (reported on 1099 misc box 3) considered unearned income for purposes of the kiddie tax?

While form 8615 Instructions define unearned income to include "taxable scholarship and fellowship grants not reported on Form W-2," Publication 17, in discussing standard deduction for dependents, says that for purposes of standard deduction, earned income includes any part of a taxable scholarship or fellowship grant.  So the grant/stipend can be counted as earned income for that purpose, allowing the dependent to claim the higher standard deduction amount.
New Member

Is a student stipend to cover travel and housing costs for a summer internship (reported on 1099 misc box 3) considered unearned income for purposes of the kiddie tax?

The portion of your investment income that is greater than $1050 but less than $2100 is taxed at your individual tax rate. It gets included with your earned income to determine what your standard deduction is. Table 20-3 of Pub 17 is used to calculate the standard deduction. That doesn't mean that scholarship income is considered to be "earned income." For instance, you won't have to pay payroll taxes on that amount, which you would have to do if it were earned income.
Dynamic Ads
v
Privacy Settings