Turbo Tax Stating Dependent Must File a Return

Forum|Forum|4 years ago
April 7, 2022
2 replies
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2021 1098-T Box 1 $7670.65, Box 5 $9646.55 and Books $490.03. Mary did not have unearned income nor did she work in 2021. Turbo Tax is stating ‘It Turns Out Mary’s Education Assistance Counts as Income. Mary will need to file a tax return to include this $1486 amount taxable income.’

2021 1040 Instructions Chart B —For Children and Other Dependents. The chart is used to determine if a dependent must file a return. Taxable scholarship and grants fall under earned income. Single dependents. Were you either age 65 or older or blind? No. You must file a return if any of the following apply: • Your unearned income was over $1,100. • Your earned income was over $12,550. • Your gross income was more than the larger of— • $1,100, or • Your earned income (up to $12,200) plus $350.

Why is Turbo Tax stating that Mary must file a return?

AmyC

Employee

People confuse the rules so err on the side of caution, $1,100 is a key figure here. The actual rules are Topic No. 421 Scholarships, Fellowship Grants, and Other Grants. Due to her income, I wonder if you qualify for education expenses now that the limits have changed. Credit is phased out at modified AGI between $80,000 and $90,000 ($160,000 and $180,000 MFJ). If you qualify, you need to move some numbers around. I recommend you look at another of my answers for help in maximizing your refund.

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Hal_Al

Employee

The TurboTax alert is poorly worded. It should say Mary MAY need to file a tax return to include this $1486 amount taxable income. Or something like "she will need to include this taxable amount if she is otherwise required to file a tax return".

The info you quoted on filing requirements is correct.