Problem entering scholarship as income

[wilrene374]

Last year (2019), my son, who is a full time student (under 24), entered a small W2 amount as well as the taxable amount of his scholarship, on his own 1040. Line 7 showed "SCH" with the scholarship amount and the box was the total. We used the "Child's Income (Under Age 24)" section of Turbotax to enter it. For 2020, when we click on that section we get a screen that tells us that we don't have enough Unearned Income ($2200 or less). Does this mean he doesn't have to file? I tried to go to the "Forms" view to enter things manually but that didn't work either.

[KathrynG3]

For 2019: If your son provided more than 50% of his support, then he could have potentially claimed education credits if his tuition exceeded his scholarship. See: The Lowdown on Education Tax Breaks - TurboTax Tax Tips & Videos

If he did not provide more than 50% of his support, then Form 1098-T should not have been included on his return. Dependents are not eligible for the education tax credits.

The only time the SCH with the scholarship should be taxed is when the scholarship amount is greater than the tuition for the university.

The Child's Income(Under Age 24) section is not for scholarship reporting. It is used for unearned income which includes:

•  taxable interest,
• ordinary dividends,
• capital gain distributions. 
• unemployment compensation,
• taxable social security benefits,
• pensions,
• annuities,
• cancellation of debt, and
• distributions of unearned income from a trust.

The 2019 tax return for your son should be amended and mailed in. See: How do I amend my 2019 return?

For 2020: 

When a child has unearned income greater than $2,200, then the child is taxed at his parent's rates for unearned income amounts exceeding $2,200. No, this alone does not mean he doesn't have to file. See: What is the 2020 Kiddie Tax?

Regarding whether your son needs to file, see: Do I need to file a federal return this year?