Amen on that. Oh, I fully plan to take the scholarship and pay the taxes, whatever they are, because I recognize that the value of the scholarship far outweighs the taxes owed. And the scholarship I’m talking about is small. Just as I won’t complain about the taxes we would owe on the graduate tuition waiver we could possibly get (because paying 24% of $40,000 is better than paying $40,000). However, I do think it’s unfair to place this burden on students (forget me, I’m thinking of the kids) – and my guess is those who aren’t fully up to speed on the tax implications and who also get large scholarships will be in for a surprise. I see posts on here from students who become aware that they may owe taxes on their scholarship and don’t have the funds for it. That’s all.
IIRC, taxes on grad school tuition remission was removed from the new tax law before it passed.
That’s true; the proposal to tax graduate school tuition waivers was dropped after a loud outcry.
You’re a parent, right? So it’s your son, not you, who is taking the scholarship, and it will be your son, not you, who will owe the tax on the scholarship (if any).
Based on the information you have provided in your second post in this thread, your son won’t owe any tax in 2018, even with the small scholarship that is treated as taxable income because of the way it is used.
For the most part, college students are legal adults. At what point do they need to take on adult responsibilities?
Maybe when they aren’t charged the kiddie tax for scholarships they earn on their own that has nothing to do with their parents?
Sorry, you’ll have to talk to your elected federal representatives about that. But, now that the kiddie tax is based on the estates and trusts rates and not the parents’ highest marginal rate, it does have less to do with the parents. I’m sure that you also know that taxable scholarships were not until recently considered unearned income for the purpose of the kiddie tax. Maybe you know the legislative history and/or the IRS logic in making that change.
Logic? IRS? Surely you jest?
Certainly somewhere there is an explanations as to why, starting in 2013, the kiddie tax went from being a tax on a child’s “investment income” to being a tax on a child’s “unearned income,” and for the first time taxable scholarships were explicitly subject to the kiddie tax. Whether or not there is any logic to this change is something that each person will have to decide for themselves.
Ha! Enjoying this thread immensely. Is it smart or outrageous that someone who makes millions pays less as a percentage of income than a middle-upper class family? Regarding the comment on adult responsibilities – oh, I completely agree. My son is taking internships and campus jobs and he has to pay any taxes. But I’ still here to help, because his #1 job at the moment is being a student. So if he has tax to pay from 2019 scholarships, I will be there to help if he wants and needs it.
Logic… IRS… bahahaha.
Scholarships directly to pay school tuition is not taxed. Also, books and fees related to school are not taxed.