10. Eddie (age 20) is an undergraduate student at UGA Eddie works hard for his g

Question

10. Eddie (age 20) is an undergraduate student at UGA Eddie works hard for his good grades. For 2018, Eddie received $18,000 of scholarship income. His total tuition and fee expenses were $10,200. Eddie also paid housing and meal plan costs of $12,000 for the year. Eddie is claimed by his parents. Eddie had no other taxable income for the year. What, if any, is Eddies taxable income and tax? a. What is Eddies taxable income? (2 pts) b. Is the scholarship considered earned or unearned income? What tax rates apply? (2 pts) c. What is Eddies tax? (2 pts)

Explanation / Answer

As per Georgia Tax laws,

a) - Taxable part of scholarship would be being an amount used room and board

- expenses of housing and meal cost amounting $12000 would be taxable income.

b) - Scholarships are not earned income for the purpose of credits like EIC.

- it is not earned income for eligibility for an IRA Contribution.

c) -As per kiddies Tax rates, rate of tax would be 35%

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