<p>For the purposes of the “Kiddie Tax” (see IRS form 8615 instructions: <a href=“http://www.irs.gov/pub/irs-pdf/i8615.pdf”>http://www.irs.gov/pub/irs-pdf/i8615.pdf</a>), taxable scholarships are considered unearned income. You need to determine whether or not the student will be required to file form 8615 before you go further with your analysis.</p>