NMF Scholarship and taxes

paying4collegex4
Wed, 26 Feb 2014 03:11:40 +0000

@rolltide94 – TaxAct is calculating this correctly. The IRS changed the instructions this year for form 8615 to specify that the taxable portions of scholarships (basically anything other than what goes to pay for tuition, fees, and books) is now considered unearned income for purposes of the Kiddie Tax – which is calculated on form 8615. In prior years, scholarships were not on the unearned income list. The net result is a much higher tax hit on the housing scholarship for most people. (Turbotax does not calculate this correctly this year. It is still treating the taxable part of scholarships as earned income at least as of this past weekend.) Note that the taxable portion of scholarships is still defined as earned income for purposes of claiming the standard deduction, so at least that is a small offset.