Pacun Posted April 3 Report Share Posted April 3 If I recall correctly, line 7 on 1040 used to dot SCH for taxable scholarship if entered correctly. How do I do that on the new 1040 line 1? Quote Link to comment Share on other sites More sharing options...
Margaret CPA in OH Posted April 3 Report Share Posted April 3 The last one I had I put on Sch 1, Page 1, line z, Other Income. You can jump to the list which includes Taxable grants and more but I just added in the bottom space Taxable Scholarship and the amount. 1 Quote Link to comment Share on other sites More sharing options...
Pacun Posted April 3 Author Report Share Posted April 3 That's exactly what I did but I think there is a more elegant way of doing it. In any event, the end result is the same. I entered "Less scholarship already reported as income elsewhere in the return" 3,000. And then I entered 3K on Sch 1, other income, SCH 3,000 Thank you. 1 Quote Link to comment Share on other sites More sharing options...
TexTaxToo Posted April 4 Report Share Posted April 4 Sch. 1, line 8r is specifically for taxable scholarships and grants. It no longer goes on Form 1040 line 1 as that is for earned income only. 4 Quote Link to comment Share on other sites More sharing options...
Randall Posted April 4 Report Share Posted April 4 Are you talking about taxable scholarships that would be included in earned income to increase the standard deduction for the student who's W2 was less than the standard deduction? What about taxable 529 money? Would that also increase the standard deduction? It doesn't appear so on the ATX input. Quote Link to comment Share on other sites More sharing options...
Pacun Posted April 5 Author Report Share Posted April 5 14 hours ago, Randall said: Are you talking about taxable scholarships that would be included in earned income to increase the standard deduction for the student who's W2 was less than the standard deduction? What about taxable 529 money? Would that also increase the standard deduction? It doesn't appear so on the ATX input. No, I am just making the scholarship taxable so that AOC comes to play. Quote Link to comment Share on other sites More sharing options...
TexTaxToo Posted April 5 Report Share Posted April 5 Taxable scholarships count as earned income for purposes of the filing requirement, but once the filing requirement is met, they do not count as earned income for other purposes (such as EIC) - unless they are reported on a W-2. 1 Quote Link to comment Share on other sites More sharing options...
Lion EA Posted April 5 Report Share Posted April 5 Kiddie Tax on taxable scholarships or no? 1 Quote Link to comment Share on other sites More sharing options...
TexTaxToo Posted April 5 Report Share Posted April 5 Yes, taxable scholarships count as unearned income for the kiddie tax, so if unearned income is more than $2,500 and they are otherwise subject to the kiddie tax, they have to file Form 8615 - but only if they are required to file. For example, a student who is a dependent (so they cannot claim AOC for themselves), and has only scholarship income, would not have to file unless the scholarship income is over $13,850. But once they hit the filing requirement, any amount over $2,500 would require Form 8615. 2 2 Quote Link to comment Share on other sites More sharing options...
Pacun Posted April 9 Author Report Share Posted April 9 so, technically, it is a no brainer to make it taxable since the parents return is not negatively affected... only the AOC benefit, correct? At worst, the student would have to pay at parents rate. Quote Link to comment Share on other sites More sharing options...
TexTaxToo Posted April 9 Report Share Posted April 9 Certainly, if the student isn't required to file. If the student will have to file, you have to look at the phaseout range of the AOC (above 160K MFJ, 80K other). At some point above that, the benefit to the parent will be offset by the cost to the student. Also note that the first $2000 of expenses generates a 100% credit, but the next $2000 only 25% credit, so a combined marginal rate above 25% for the student would make it not worthwhile to claim more than $2000. 2 Quote Link to comment Share on other sites More sharing options...
Recommended Posts
Join the conversation
You can post now and register later. If you have an account, sign in now to post with your account.