Does anyone know the tax rate for scholarships when the student is no longer a dependent? Is the amount of taxable scholarship taxed at the regular income rate or does something special apply. Student has earned income well in excess of standard deduction
“No longer a dependent” isn’t the rule for determining if someone is subject to kiddie tax. So not enough information to tell.
If earned income is more than half of their support, or if they’re 24 or older, the scholarship is taxed just like ordinary income. Otherwise, the kiddie tax rules and trust tax rates are likely to apply. The scholarship is not earned income for purposes of this test.
New grad. Age 23. Her AGI is 3/4 of mine, so definitely providing more than half her support. Ordinary income it is.