Personal Finance (Not Investing) • College Scholarship and Kiddie Tax

My daughter received a full scholarship to college. $20k of this will be for room, board, travel and other expenses. So the IRS will consider this unearned income. According to the IRS, she is subject to the kiddie tax if -

Was a full-time student at least age 19 and under age 24 and didn’t have earned income that was more than half of the child's support.

Your support includes all amounts spent to provide the child with food, lodging, clothing, education, medical and dental care, recreation, transportation, and similar necessities. To figure your child’s support, count support provided by you, your child, and others. However, a scholarship received by your child isn’t considered support if your child is a full-time student.

So, I'm confused on the last part in bold. So here are some likely number for 2025.

W2 income from a part time job - $10k.
Parents support - $5k
Scholarship for room and Board (Taxable) - $20k
Scholarship for tuition (Tax-free) - $5k

Assume all this money (total $40k) is used for "support". Does this mean she will pay 25% (10/40) of her support and is subject to the kiddie tax or 67% (10/15) and not subject to it?

Statistics: Posted by moneym — Tue Jul 30, 2024 11:55 pm — Replies 1 — Views 191

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