Question

CA dependent student resident attending CA college with CA resident parents. Do I owe kiddie tax on my fellowships?

Forum|Forum|1 year ago
March 3, 2025
1 reply
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20 year old dependent full-time student. $3213 W-2 income working as a course assistant in 2024.

Had an award for $2000 and provost fellowship for $5500 doing research over the summer and fall. Had only 310 in 1099-INT income. Parents paid for rent and tuition all year well over $90K!

Federal 1040 Line 1a 3213, 2b taxable interest 310 , Line 8 Additional income of 7500 from Schedule 1 line 10.

Standard deduction for dependent is 11163 and since my total is 11023, Federal tax shows a refund of my $10 paid in W-2 withholding.

For CA, it is creating Form 3800 and counting 7500+310 as unearned income and asking for parents Form 540 income and taxes. Is this correct? Only 310 is really unearned interest income. The award and fellowship are not taxable on Federal return, but are in CA at parents' rate?

Read all the other Form 3800 questions on this discussion, none seem to apply in this case. Can't figure out which interview question is answered incorrectly on Fed/CA state. Please help.

Hal_Al

Q. Do I owe kiddie tax on my fellowships?

A. No, not on your federal return. But, this is only because your total income was below your standard deduction. You apparently successfully enter the award and provost fellowship amounts on line 8r of schedule 1, as scholarships.

Scholarships are a hybrid between earned and unearned income. It is earned income for purposes of the $14,600 filing requirement (2024) and the dependent standard deduction calculation (earned income + $450). It is not earned income for the kiddie tax and other purposes (e.g. EIC). For grad students and post grad fellows, scholarship, stipend and fellowship income is earned income ("compensation") for IRA contributions.

I'm not specifically familiar with California, but am surprised this is coming up. You may have triggered it by answering something wrong.

B

BAqsAuthor

Thanks.

Undergraduate student involved here. Did not get any paperwork for this provost fellowship or award, just credited to my college student account periodically and I withdrew it to my bank account. Did not have any state tax withheld in CA on the W-2, so I guess I don't need to file, but shouldn't TurboTax tell me that?

Last year (no fellowships or awards) I worked in summer and got $8 back, even though I had asked that employer not to withhold any state taxes. Can I not file 2024 CA taxes if I did in 2023?

Also, I thought Federal standard deduction for dependents is supposed to be earned income plus $450. My total was 11023 and dependent deduction calculated by Turbotax was 11163. Both are below the regular standard deduction, so that doesn't seem right either.