This is really helpful insight! Do you know if students need to provide receipts for all the qualified expenses, or is it enough to show tuition statements from the school? My daughter is dealing with something similar and we're trying to figure out what documentation we need.

Students should keep receipts for books and supplies, especially if they weren't purchased directly from the campus bookstore (since those often show up on the student account statement). For tuition and required fees, the 1098-T from the school is generally sufficient documentation. What really helps is a statement from the scholarship program specifying that the funds were intended for educational purposes. If your daughter's award letter or program materials specifically mention educational use, keep those documents. If the money went directly to her rather than to the school, she'll need to show the connection between receiving the funds and paying for qualified expenses, which is where having detailed documentation becomes important.

Seriously? I had no idea they'd pay interest on delayed refunds! Do they automatically calculate that or do I need to request it somehow? And will that interest be taxable for 2025?

Yes, they calculate and add the interest automatically, you don't need to request it! The IRS adds it to any refund that's issued beyond the 45-day processing window. The interest is considered taxable income, so you'll need to report it on your 2025 tax return (the year you receive it). The IRS will send you a Form 1099-INT if the interest is $10 or more, but you have to report it regardless of the amount or whether you receive the form.

This happened to my sister too! She sent a return, they claimed they never got it, but she had the certified mail proof. Still took like 9 months to sort out. Paper returns are seriously the worst.

We're in Illinois. Do you know if there are any special requirements here? The commercial was for a regional grocery chain, and I don't think they mentioned anything about special accounts when we signed the contracts.

Illinois doesn't have a specific Coogan Law like California or New York, so you don't have the same legal requirement to set up a blocked trust account. However, it's still a good practice to save some of your children's earnings for their future. Since the commercial was for a regional grocery chain and the earnings were relatively modest ($1,200 each), you're mainly just dealing with the standard tax considerations that have been discussed in other comments. Just make sure to check those W-2s to see if any taxes were withheld, as that would be a good reason to file returns for them to get those withholdings back.

Do kids who act in commercials need an agent? And how does that work with taxes if the agent takes a percentage? Does that count as a deduction?

This makes so much sense now! I think I was overthinking the questions because unemployment feels different than a regular job, but from a dependency perspective, I'm still supporting myself. Did you end up just answering "yes" to the question about supporting yourself with earned income even though unemployment was part of your support?

Yes, I answered "yes" to supporting myself with earned income, even though a good chunk of my income was unemployment. The key is understanding what TurboTax is really asking - they're trying to determine dependency status, not doing a technical breakdown of income types. For dependency test purposes, the important thing is that you're supporting yourself (versus being supported by parents), not the technical classification of each income source. Once I answered "yes" to supporting myself, TurboTax correctly skipped Form 8615 and everything else fell into place. Form 8615 is specifically for children/students who ARE dependents and have unearned income above certain thresholds. Since you're not a dependent, that form shouldn't apply to you regardless of how much of your income is "earned" vs "unearned.

No, unemployment benefits are definitely considered unearned income for tax purposes. Even though you might have paid into the system while working, the IRS classifies unemployment compensation as unearned income - similar to interest, dividends, or other income you didn't directly work for. This distinction matters for things like the Earned Income Tax Credit (which requires earned income), but in OP's case, the key issue isn't about earned vs. unearned income - it's about dependency status. Since they support themselves and can't be claimed as a dependent, Form 8615 wouldn't apply regardless of how their income is classified.

Thanks for this suggestion! Which tax software were you using? I'm on TaxAct for Business, and I'm wondering if that might be the issue.

I was using ProSeries when I had that issue. With TaxAct, you should be able to check for updates by going to the Help menu and looking for "Check for Updates" or something similar. If you're using their online version rather than desktop software, try clearing your browser cache or using a different browser entirely. Sometimes these issues can also be related to the subscription level you have - some tax years might not be available if your subscription doesn't cover that period. Might be worth checking with TaxAct support directly if the update doesn't resolve it.

I filed our partnership extension last week using UltraTax and had no issues selecting the 2023 tax year (for filing in 2024). Everything processed normally. So I don't think it's an IRS-wide system issue.