My daughter filing as dependent. Taxable income $9,959 ($843 wages + $9,116 scholarship excess) Turbo Tax is applying 10,409 Standard Deduction instead of $1,250 Why?

[shopper654]

Standard Deduction for Dependents: Rule: Greater of $1,250 or earned income + $400, up to $13,850 (2024 max). Turbo Tax is treating my daughter as a non-dependent even though she chose "full student" and "she can be claimed as a dependent by other"

[VolvoGirl · Accepted solution]

The excess scholarship show up on 1040 line 1 and counts.  So $9,959+450=10,409.  You used 2023 amounts.  The amounts for 2024 are minimum 1,300 or earned income plus 450 to a max of 14,600.

See Table 8 Standard Deduction worksheet for Dependents on page 26
https://www.irs.gov/pub/irs-pdf/p501.pdf

[shopper654]

Thank you, Volvo Girl.  

I didn't know if a Taxable Scholarship was earned or unearned income? Because per Pub. 970 (2024), scholarships are earned income only if tied to services (e.g., teaching, research). Most student scholarships (e.g., for tuition) are unearned unless specified.    

But I trust you and Turbo Tax.   Publication 501 (2024) says "Earned income includes wages, salaries, tips, professional fees, and other compensation received for personal services you performed. It also includes ANY taxable scholarship or fellowship grant."

Thanks again!