<p>annoyingdad,</p>
<p>Thanks for keeping us informed.</p>
<p>So I applied the update and found I had to go into the Tax on child’s investment income dialogue under Taxes to get the 8615 to generate. Nothing warned me that I needed to do so. I’ve emailed them back saying it should have taken me there automatically.</p>
<p>Question: When I am filing online, how do I put “SCH” next to the scholarship amount? Daughter has $8500 taxable income. $1500 wages and $7000 taxable scholarship (room and board portion). I am supposed to then indicate the actual number that is scholarship and write SCH? How do I indicate that SOME of the $8500 is a scholarship ($7000) but not ALL. ?? And when filing online - I can’t figure out how to “write” anything!</p>
<p>There are a lot of ways to file ‘online’. Which particular method are you using? The $8500 goes to the right of the line number where amounts normally go, the SCH 7000 goes to the left of the line number in the empty space. You don’t just put SCH you put SCH 7000 to the left.</p>
<p>For turbotax basic online, see <a href=“https://ttlc.intuit.com/questions/2015091-where-to-enter-taxable-scholarship-and-grant-info-on-turbotax-basic-online”>https://ttlc.intuit.com/questions/2015091-where-to-enter-taxable-scholarship-and-grant-info-on-turbotax-basic-online</a></p>
<p>AnnoyingDad and 4kidsdad - thanks for the answers. As I read this thread I am beginning to see that, as of tax year 2013 we are supposed to file this as Investment Income and referencing form 6815. This will be a whole different ball game from how we were planning to do it (having my daughter file her own return with just this small amount of income and taxable scholarship). So is TurboTax still allowing us to put it as “Wages” and annotate “SCH” - or are both of you now reporting it as unearned income? She is a freshman so I have four more years of this. (: But hey - happy to have this problem! better than paying in full!) Thanks! </p>
<p>Filing the 8615 doesn’t affect how you report the scholarship income, it still is reported with SCH as above on the 1040EZ/1040A. I used Taxact which as you can read above made changes that now support filing the 8615 for taxable scholarships. The 8615 does require the 1040A. The 8615 calculates part of the scholarship income at the parent’s tax rate. No one has posted here that TT has made a change that supports the 8615 so I don’t know if it does.</p>
<p>Grateful for this answer - How do you “write SCH” and the number when using software to file your taxes - the line for “Wages, tips and other compensation” only allows me to put in a total number. Part of the income is a job and the other part taxable scholarship - but all i can enter is a total number, nothing more. Where / how did you annotate? Did you use 1040EZ? 1040A? anything else that I need to know? Thanks for your patience with my questions. My accountant is clueless. </p>
<p>My son filed the 8615 which required the 1040A. Taxact automatically put SCH XXXX to the left on line 7 based on the amounts I had entered for all the education topic questions. That was for the printed copy. I’m sure it would have transmitted that to the IRS had I used Taxact to e-file. But I used the IRS fillable forms to e-file his return for free. On the fillable forms there was a box to the left of line 7 to click on and enter the SCH XXXX.</p>
<p>I can’t really help you with any other software. Does your software ask questions about education amounts? Do a print preview of the completed forms and see if it shows the SCH in the printed version.</p>
<p>
Get a new accountant </p>
<p>H&R Block Free is triggering 8615. TurboTax Free does not. (And as a student filing her own taxes in two different states, I cannot express how frustrated/annoyed I am.)</p>
<p>AnnoyingDad - That explains a lot - thank you. I had not gotten that far into the return to see that it would allow me to annotate that. Question on the new 8615 rules. That will ask that she be taxed at parent’s rate - do I also have to my return through same program so it can pull my tax rate from that? My return involves a corporation (that incurred a loss this year - a little complicated) so I have my accountant doing mine - and thought I would do my daughters since I knew more than he did. SO - how does it know “my tax rate” ? Do I enter it myself? I know I am asking before I actually complete the return - but do not want to get almost done with her return and realize the two returns need to be connected. Thank you.<br>
PS - Maybe I should use TurboTax free to avoid it. But i don’t want it to trigger a red flag. When I go online to read Pub 970 “Tax Benefits for Education” from the IRS for 2013 tax rules it still does not mention the ‘new way’ of calculating this using form 8615 - so unsure how the IRS could hold me accountable when their own publications explain it differently. Doing my best here…</p>
<p>Here’s the 8615:</p>
<p><a href=“http://www.irs.gov/pub/irs-pdf/f8615.pdf”>http://www.irs.gov/pub/irs-pdf/f8615.pdf</a></p>
<p>The Title of the form has changed this year from Investment Income to Unearned Income.</p>
<p>Here’s the instructions:</p>
<p><a href=“http://www.irs.gov/pub/irs-pdf/i8615.pdf”>http://www.irs.gov/pub/irs-pdf/i8615.pdf</a></p>
<p>Throughout the instructions this year everything refers to unearned income vs. investment income. The definition of unearned income on page 1 clearly includes taxable scholarships/grants not reported on a W-2. I think it’s clearly a change and I don’t think Taxact and H&R Block would include it without having their tax experts check into it thoroughly.</p>
<p>If you look at the 8615, lines A-C come off the parents return, as well as lines 6-10 for determining the parent’s rate . Nothing really has to be linked. The IRS will link your return with hers via the SSN and that you claimed her as a dependent. The form is a little complicated so it’s a question of how comfortable you are following the instructions. I don’t know if showing a paper loss on your return will impact this in anyway, AMT or anything else. It’s clear your return has to be done first. Even if your accountant is clueless about taxable scholarships, s/he should be familiar with the 8615 from clients who did have the kiddie tax apply in past years.</p>
<p>I don’t know what will happen to those who file having taxable scholarships without using the 8615. Perhaps nothing, perhaps they will hear from the IRS within a year or two. The only document the IRS may get to ‘tip them off’ is the 1098T which isn’t even required to be furnished to students or the IRS when scholarships are greater than billed expenses. So who knows.</p>
<p>I am glad I started this thread! We are getting a late start this year, and really happy to see this thread is still active! We are thinking of using TaxAct or TurboTax for our family…3 tax filers. We will most likely use a actual program we buy at Staples, Walmart, ect…Any last minute advice on the different programs?</p>
<p>TurboTax updated its forms last week to pick up this nasty little change by the IRS in its interpretation of the law. I just feel sorry for folks who used TurboTax and filed before the change was made. I expect some will be hearing from the IRS.</p>
<p>Yup - I was one of those who used Turbo tax. I reported the issue weekly and asked for updates every 2 months. Finally gave up and filed in early April…Meanwhile, my son has told me many of the kids he spoke to were not reporting it at all with the attitude that the government would never know of the housing scholarship.</p>
<p>Hi, I just wanted to clear up something here. The interpretation from the IRS isn’t new. They just clarified it. Prior to 2013, the title of form 8615 implied it only included investment income. But the instructions for that form – at least back to 2010 – always explained that for purposes of the 8615, almost everything is unearned income. I’m currently doing amendments for my son’s returns for 2010 through 2013. I doubt it would ever catch up to him but I don’t want him starting out on his own with this hanging over his head.</p>
<p>I’m no fan of the IRS and they shouldn’t have had a misleading title on the 8615, but TurboTax, H&R Block and the others could have easily concluded what I have from simply reading the instructions with the form.</p>
<p>
The statue of limitation for 2010 tax returns is 4/15/2014. Are you just extending IRS’ deadline to audit your son’s 2010 returns? (I don’t think IRS will bother to audit him; but I also think it’s not good idea to “re-open the closed returns”.)</p>
<p>
All scholarships are reported on your 1098-T.</p>
<p>^^^ some schools don’t even issue 1098-T. Some parents are ‘moving’ funds that are otherwise not taxable to the student to taxable to take the tax credit.</p>
<p>I’m thinking there are a lot of football and basketball players on full scholarships not paying the Kiddie Tax on their room and board.</p>