If all of your income combined including from jobs and any taxable scholarship and grant amount is enough to require you to file, you have to file your own return. You parents can’t in any way report this income on their return. Only investment income for a tax dependent can be reported on a parent’s return. If all of your income is W-2 wages and taxable scholarships and grants, you will have to file if they total more than $6200.
I think you have to file if the unearned scholarship income is more than $2000. In looking at Form 8615, the taxable amount gets transferred over to line 28 of the 1040A, which is below the taxable income/personal exemption line, so you don’t get to use that $6200 exemption to offset the unearned income of the scholarship.
One more important thing: if your parents claim you as dependent on their tax return, you should not claim any personal exemption when filing your own tax return - see section excemptions in IRS Publication 501 in the link above. If you claim personal exemption, the IRS will reject either your parents’ return or you own return (the one filed later).
Also you need to check if you have to file your resident state return. And if you income is earned out of your resident state, you need to check if you have to file return for that state too.
Also, be aware that the 1098 T form may include scholarship amounts for both fall2014 and spring2015 semesters, although the spring2015 amount probably does not get paid on you account until 2015, so should not be included on your 2014 return. You will need the spring2015 amount for 2015 taxes, so save the form and your calculations for next year. I printed out copies of my daughter’s college account statements and saved them along with my notes, which hopefully will help save time when we file this year’s forms. We used HR Block tax software for the 2013 return and it was relatively straightforward.
The hard part is gathering the information needed, which you would need to do even if you pay someone to complete the returns for you. You need to have receipts/records for books, supplies, tuition, school/class fees, room and board costs for each semester. Your mom would also need to have her return completed to calculate any kiddie tax due with form 8615, since it is based on your parent’s tax rate. You can use the free version of Tax act online also, I remember that it was recommended on CC in another thread.
As it has in past years, IRS Pub 501 for 2014, on page 3 still says:
http://www.irs.gov/pub/irs-pdf/p501.pdf
It is something of a conflict with form 8615 but tax software last year did give the standard deduction before calculating taxable income and should still this year. And assuming no self-employment income and less than $1000 in unearned income the threshold for filing should be $6200 for someone who can be claimed as a dependent on their parent’s return.
That would be good news.
The $1k in unearned income piece of the filling requirements is code for “is subject to Kiddie Tax.” So it’s really worse, not better, than $2k.
Just to be clear though, the $1k in unearned income ‘kiddie tax code’ for the filing requirements doesn’t include taxable scholarships/grants. For this purpose they are earned income.
No, the 8615 is part of your tax return, even though it uses information from the parent’s return. Download the form and the related instructions from the IRS website. Read everything carefully and complete the form step-by-step. It may seem daunting at first, but it’s really not that difficult. If you had about $6,000 in unearned income, you will need to do this.
A standard deduction still applies. It’s just that the tax amount will be different (read: more) when the kiddie tax kicks in.
AnnoyingDad, are you going to be available to explain this to the IRS when I get hit by the bus and my children get audited? I don’t think anyone else understands this.