My son was lucky enough to win a full ride scholarship for four years of college. He’s currently in his second semester. While he’s home for Spring Break, I want to teach him how to do his taxes, but I need to be sure I understand things first.
1098T: Box 2 $10122.76
Box 5 $11692.88
Box 7 checked (because the amount in box 2 includes amounts for an academic period beginning January-March 2016.
What does this mean for 2015 taxes?
And, I believe we need to make quarterly payments or he’ll have to pay a penalty and interest next year.
At his university tuition is $4810 per semester. Room and board is $4643 per semester. The extra $502 in Box 2 is fees the university covers with the full ride.
Box 2 is tuition and fees for the full academic year ($4,810 x 2 + $502). Is box 5 the amount of scholarships/grants for the full academic year? Because if so, he’s not getting a full ride - there is about $7,715 in room and board not being covered by scholarships/grants.
I read it as fall tuition+ room and board +fees is $4810+$4643+$502= $9955. If all of the fees are QEE, then total QEE for 2015 is $5312. Total scholarship received is $11692, so $11692-$5312 (plus any books?)= $6380 taxable scholarship. Your son got more than tuition+r&b+fees as scholarships, as he got $11692 and not $9955 (an extra $1737).
I was thinking about it and understand what happened. He was billed for both semesters of tuition and fees in 2015 (Fall billed in August 2015 and Spring billed in December 2015). The scholarship amount given out included the tuition and r&b just for Fall (given out in August).
So, does that mean we have to subtract the amount from the scholarship that was room and board? It seems easier not to, but maybe it’s required. He’d still have $1000 plus change that he owes taxes on, and of course next year, there would be a big chunk he owes taxes on, so we have to set up quarterly payments.
So, essentially, if he can’t claim the scholarship amount that went toward Spring’s tuition, we should have paid quarterly last year in anticipation, correct?
You have to pay quarterly if he owed taxes last year and he hasn’t paid at least 90% of that amount in withholding this year. Basically you get one free year that penalties won’t apply.
Did he have another source of income this year? If not, and he’s paying taxes on just the $6380 in r&b, I’d have him ‘pay’ that this year and his personal deduction will cover it. You’ll then ‘save’ the tuition offset for spring until 2016 taxes.
If the students personal deduction would cover the entire taxable portion, would he even need to file taxes?
I know when my kids were under that amount when working I only had the taxes filed to get the fed withholding tax refunded. Otherwise, they were not required to file. Is it different w/ “scholarship income.”
His books were only about $112, I think. Have to locate the receipt. He did get $1000 from other scholarships and earned $399. Good to know we have a year free of penalties. And, he won’t owe much this year, so that’s good too. Thanks for the help!