<p>I'm preparing to fill out FAFSA for D. As I'm pulling everything together and reviewing the FAFSA worksheet, a question has come up that some of you may have run into previously. D did not have earned income last year so we were not planning on having her file an income tax form. She did receive a 1098T--her allowable expenses were more than her scholarship money so no tax will be due on that. We had assumed we would show the 1098T on our tax forms, but does she need to do it instead and thus fill out an income tax form for just the 1098T? I believe on the FAFSA itself I'll fill in on the student portion that she received a reportable grant/scholarship, correct? Can she state that she received a scholarship but will not file taxes? I hope my questions are clear. Thanks!</p>
<p>She doesn’t need to state that she received a scholarship, because none of it was taxable. On her FAFSA, just put no income and will not file. You take the education credits on yours.</p>
<p>Yep - show her 1098T on your tax forms, that way you can claiim her education credits if you qualify.</p>
<p>As long as the entire scholarship went toward tuition and fees - “qualifying expenses” then you are okay. If any portion went to room and board, that amount is taxable income.</p>
<p>Thanks both of you. FAFSA done.</p>
<p>If part went to room and board, then is that taxable income to the parents, if the child is claimed as an exemption, or to the child?</p>
<p>No. The income goes on the student’s return and the credits go on the return of whomever claims the student.</p>
<p>fredmar- in all my research, it seems that any taxable portion of scholarships goes to the student’s return, any “creditable” portion of tuition expense CAN go to the parents return</p>
<p>Thanks for the information.</p>
<p>[Is</a> Your Scholarship Taxable? - FastWeb](<a href=“Should I Claim Scholarships & Other Awards on My Taxes? | Fastweb”>Should I Claim Scholarships & Other Awards on My Taxes? | Fastweb)</p>
<p>This article seems to conflict with IRS 970 - under the section, Making It Legal: Reporting Taxable Awards: “If your only income is a tax-free scholarship or fellowship, you’re in the clear. You don’t have to file a tax return or report the award.” On the other hand, if all or part of your scholarship is taxable and if that money is not recorded on your W2 form, you must report it.</p>
<p>So if a student has no earnings is the scholarship not taxable even if it exceeds the tuition and fees.</p>
<p>How do you get that from what you quoted? It does not say that at all. It says if your only income is a tax free scholarship you are in the clear. Scholarships over the amount of tuition and fees is not a tax free scholarship.</p>
<p>If there were a conflict between what fastweb says (which I don’t see here) and what the IRS says, I think the IRS publication would be the one you should follow. I suspect an IRS audit would agree.</p>
<p>The full quote from fastweb is</p>
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</p>
<p>I took that to mean even if your scholarship exceeds your tuition it would not be taxable if you had no other earnings but if you did have others earnings it would be taxable.</p>
<p>No. That would be illogical even for the IRS. Wishful thinking maybe?</p>
<p>It is tax free if it is used to pay for qualified education expenses. it is taxable if it is not used to pay for qualified education expenses. Of course just like with any income if you don’t have enough income to be required to file then it won’t end up actually incurring any tax. But if the income is high enough then it will.</p>