There’s a worksheet on page 16 of IRS Pub 501 to help figure support provided. Any income you make that increases your savings over the year, isn’t support you provided yourself.
^^Thus if it costs $40k to cover a student’s support needs for the tax year, and the student earns at least $20k but does not spend $20k plus $.01 of her earnings, then she is not providing over half her support.
Schedule C and Schedule SE are filed along with your Federal 1040.
Because you have self-employment income, you might also be able to set up a SEP IRA. The money goes into a standard rather than Roth type of IRA plan, and is a self-funded employee retirement plan for the one employee (yourself) in your business. http://www.irs.gov/Retirement-Plans/Retirement-Plans-FAQs-regarding-SEPs
The other thing that should be mentioned regarding tax dependency is:
Page 15 of Pub 501. So they aren’t part of total support and aren’t support the child provided themselves. The IRS wants parents of students to be able to continue claiming the students as dependents. In most cases that is better for the family as a whole.
^^ But what if the parents don’t want to claim the student as a dependent? I assume there is no option for the parents to not take the deduction and allow the student to do so.
^^No one makes people claim a dependent’s exemption that they are entitled to claim. However not claiming it doesn’t free it up for the dependent to claim himself.
The parents can choose not to claim the student but if they can, the student can’t take the personal exemption. Line 5 on the front of the 1040EZ uses the term can, and the worksheet on the back says:
Using the worksheet results in the dependent not getting the personal exemption.
This is for the personal exemption, not the standard deduction. It can get confusing using the wrong terms.
You also need to find out if you have to pay state taxes on your taxable scholarships and income.
For federal taxes for the purpose of filing requirements and the purpose of the standard deduction, taxable scholarships/grants are considered earned income. For my state and I know some others, they are considered unearned income so that can result in a lower state standard deduction than if the income were earned income.
http://apps.irs.gov/app/withholdingcalculator/index.jsp
Here is a handy withholding calculator to see if you have enough tax withheld.
I think you would put $23,000 for your wages, $2,000 for other taxable income and $15,000 for taxable scholarships.
Of course for your unique situation it might just give you an estimate.