1099-Misc and Form 8615

[elevation10]

<p>My D received a 1099-Misc for her REU research internship. The $4000 received for the research was reported in box 3. She also has scholarship money that was used for non qualifying expenses. That amount was $4900. I am using turbo tax and it seems to be reporting the $4000 as unearned income and putting the $4000 on Form 8615 and taxing her at the parent's rate. Has anyone else had this issue. I understand that the Scholarship money is supposed to be on the Form 8615 but I don't think the 1099-Misc income should be considered unearned. Any help would be appreciated.</p>

[4kidsdad]

<p>

For Form 8615, “unearned income” includes all taxable income other than earned income as defined later. … Earned income includes wages, tips, and other payments received for personal services performed.

I don’t think the 1099-Misc income should be considered unearned.

So are you thinking the 1099-misc income is received for personal services that your D performed</p>

[entomom]

<p>You’re lucky that the REU stipend was reported in box 3 rather than box 7. I had problems with TT as well, but that was because the stipend was reported in box 7, which is generally considered self-employment.</p>

<p>I agree that it’s not unearned income, students work full time for their stipends. Shouldn’t the taxable scholarship money be earned income as well?:</p>

<p><a href=“http://www.irs.gov/publications/p970/ch01.html#en_US_2013_publink1000178003”>http://www.irs.gov/publications/p970/ch01.html#en_US_2013_publink1000178003&lt;/a&gt;&lt;/p&gt;

<p>

How you report any taxable scholarship or fellowship income depends on which return you file.</p>

<p>Form 1040EZ. If you file Form 1040EZ, include the taxable amount in the total on line 1. If the taxable amount was not reported on Form W-2, also enter “SCH” and the taxable amount in the space to the left of line 1.
Form 1040A. If you file Form 1040A, include the taxable amount in the total on line 7. If the taxable amount was not reported on Form W-2, also enter “SCH” and the taxable amount in the space to the left of line 7.
Form 1040. If you file Form 1040, include the taxable amount in the total on line 7. If the taxable amount was not reported on Form W-2, also enter “SCH” and the taxable amount on the dotted line next to line 7.

</p>

<p>I’m no tax expert, corrections welcome!</p>

[annoyingdad]

<p>

Shouldn’t the taxable scholarship money be earned income as well?

</p>

<p>No, it’s a change for 2013 for the purpose of form 8615. See this thread, page 2 starting with the February 1, 2014 posts:</p>

<p><a href=“Scholarship as Investment Income? - #16 by 2collegekids - Financial Aid and Scholarships - College Confidential Forums”>http://talk.collegeconfidential.com/financial-aid-scholarships/1473041-scholarship-as-investment-income-p2.html&lt;/a&gt;&lt;/p&gt;

[entomom]

<p>^Thanks for the update ad! I haven’t had a kid with taxable scholarship money for several years, it’s good to know that I didn’t report it incorrectly.</p>

[annoyingdad]

<p>@elevation10, is turbo tax now triggering the 8615 for taxable scholarships? If so you could add that to the thread I linked to in my previous post.</p>