1099-NEC to be entered but cant select my daughter

[RobD926]

My daughter got a "scholarship" award from her dentist, who takes applications from kids going to college.   Here 1k award was for "school related items" if i recall.   She got a 1099-NEC for 1k, but I can only assign it to myself or my wife.  My daughter had zero income last year other than what she got from us as parents.  

how do i deal with this?   Do i have to file an actual 1040 for her this year because of this?   She just turned 19 this month and is in college.

I'm not sure what or how to deal with this 1099-NEC

[VolvoGirl]

They don't have to file if they only have W2 income under 13,850 (2023) but can file to get back any withholding taken out in boxes 2 or 17. But you don't get boxes 4 or 6 back. If they got a 1099Misc or 1099NEC they have to file it  no matter how small the amount.

Be sure on their return they check the box that says they can be claimed on someone else’s return.

Filing requirements for a dependent
https://ttlc.intuit.com/community/children-dependents/help/do-i-need-to-file-my-own-taxes-if-i-m-a-d...

Start another Online return here. Sign up and start a new account.
https://turbotax.intuit.com/personal-taxes/online

[Opus 17]

All income in a child's name must be reported on a return in the child's name, never (almost never) on a parents return.  

The only time a child's income may be reported on a parent's return is if the income is only from interest and dividends from investments in the child's name and below a certain amount. 

[Opus 17]

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@VolvoGirl wrote:

They don't have to file if they only have W2 income under 13,850 (2023) but can file to get back any withholding taken out in boxes 2 or 17. But you don't get boxes 4 or 6 back. If they got a 1099Misc or 1099NEC they have to file it  no matter how small the amount.

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The filing requirement for dependents is complicated, but due to certain rules, a dependent may be required to file a return if their unearned income (income not from working) is more than $1250, or their unearned income was more than $400 and their total income was more than $1250.  

This scholarship is unearned income, so whether or not they need to file depends on if they have any other income.  But the 1099 must be reported on their return, not the parents' return.

Even though it was issued on a 1099-NEC, it should be reported as "miscellaneous" or "other" taxable income, not as self-employment income.

[Opus 17]

I want to bring in @Hal_Al here because even though this money was paid by a local business and not the actual college, it may still qualify as a tax-free scholarship, depending on other factors.  And I want him to tell us exactly how to report it and on whose tax return. 

[Hal_Al]

Ideally somebody talks to the dentist to get him to stop issuing 1099-NECs. A 1099-MISC would be better, but still not required. 

It can not go on the parent's return if the 1099 was in the student's name

How to enter in TT (but see below*):

Enter at Educational Expenses and Scholarships, under Deductions and credits (not the income section).

After answering no to having a 1098-T, answer yes to qualifying for an exception (that gets you to the entry screens). You will have to go thru the whole education interview to get to the scholarship screen. At the scholarship screen, enter the amount of the grant. When asked if any was used for room and board, answer yes. Then enter the amount you want to be taxable (usually all of it), in the pop up box. R&B are not "qualified educational  expenses".  So, this is how you tell TT that it is taxable. Note the wording at that screen “or other expenses”. You didn’t have to literally use the scholarship for R&B.  This will put it on line 8r of Schedule 1 (this line is new for 2022-3).

If you do have a 1098-T, one of the follow-up questions will be do you have any scholarships not shown on the 1098-T. Enter the additional scholarship/stipend there.  

*Since the amount is less than $1250, and the student has no other income, she does not need to file at all. The chances of the IRS flagging the 1099-NEC, if she doesn't file  are not much more than if she does file as anything other than self employment.