Do outside scholarships for college get reported as income if they are used for a computer?
The fact that you put the word “technically” in quotes tells us you know the answer.
Sorry, should have qualified that. Scholarships that go to required educational expenses (tuition, required fees and books, etc) would be tax free, but money towards living expenses such as room and board would not be. I wasn’t thinking a typical amount from a high school would be more than tuition.
My son received two scholarships that total $600. I am not reporting it to the college, however, the reason is because we are not receiving any financial aid or need based scholarships or grants. When my D went to school and was given an outside scholarship, we reported it and she was kicked out of work study. It turned out that her ws placement liked her enough that they hired her back anyway.
@thumper1 - maybe he could deposit the scholarship to his 529 and then withdraw it to use it for a computer?
Maybe he could use the scholarship to pay for all of his books…which ARE a qualified educational,expense…and use other funds to pay for a computer.
To the OP…some colleges will actually increase your cost of attendance to include a computer if it’s an essential item. If that became the case, your need based aid would not be reduced.
If the scholarship grantor gave him a computer, it would be a prize and the value would be included with income. If he receives a check for $2000, it becomes part of income unless it can be offset with a QEE. A computer CAN be a QEE if the computer is required to attend the school. Get the school to say that a computer is required (classes with codes for tests, labs, assignments, a disability that requires taking notes online).
But the scholarship, whether reported or not, whether sent to the student or the college, becomes part of the total of scholarships that have to offset QEE or they are taxable (unearned) income. If the total amount of income is over the standard deduction, taxes are owed on income.
If you are taking other FA from the school - federal loans, grants, work study, state FA, grants from the schools…the rule is you must report all outside scholarships whether they are sent to you or the school, whether you use the money for a computer or books or pizza.
Follow the rules or don’t follow them, but don’t ask us to justify your not following them.
twoinanddone has a good answer in post #25. Adding that a taxable scholarship not reported on a W-2 is considered unearned income for purposes of the kiddie tax, which potentially raises further tax issues.
The scholarship would still be taxable.
@AroundHere Okay. That is a question I will be sure to ask. Thank you.
@bjkmom Do you normally ask questions to things you already have answers for? If so, what a weird thing to do. May I ask you to stop projecting? Your comment added nothing to my knowledge.
OP, you keep saying the answer isn’t clear. The answer is clear that you need to report it to your college. You just don’t like it, and are looking for options to avoid it.
@thumper1 The problem with that is that it will be an increase in loans. A computer is required for my school, that’s why it used to have a grant up until last year. A computer is not an educational expense even though it can just as essential as books? Yes, libraries have computers but they also have textbooks. Who decides that? I can *manage * for maybe a year without a new laptop until I can figure out where the money will come from, but I know some people who have no access to any computer.
But, alas.
Anyway, another part of my questions toward my grant is if I even get a refund. I have 4200 not paid with grants, but they “covered” it with workstudy and a 1,100 loan. They very well might just be paying for tution and other stuff that I “owe” the school and expecting me with my loan and work study to pay for books, "other educational expenses ", and traveling and all the other stuff included in my budget sheet that isn’t a technical expense. So, “other funds” become quite murky in my case. But, I also heard of the term, "minium amount due " so I’m not sure if they will just pay themselves that or the total balance. Either way, until my ws kicks in, I do have other savings so it is not that imperative I get a refund at all if I properly budget.
@twoinanddone Excuse me. While it might be common knowledge for YOU, it is not for ME. That’s why I asked a question. I didn’t ask, "so, how do I fraud my college " I basically asked "will it be fraud if I don’t report this? " I was aware that there might be some differences in how different scholarships are reported. I am not as so weak willed to need encouragement to break a law. I will just simply break a law if that was my goal. But, I do not wish to do so (like most good citizens) and that is why I asked a question and yes, I was asking with the hope of one particular answer in mind.
While I am apt to say thank you for everything above your last sentence, it does make everything else seem quite condescending.
But, regardless, you did offer a helpful answer overall, so thank you.
@intparent Where do I say past page 1 that the answer isn’t clear? I do very well remember saying that given all the “yes” answers and how they changed my mind that I have to reconsider my plan . I remember posting that. I also remember saying that I will need to confirm with my old hs and my college, something I previously would not have done because I was convinced there was no need to. I admitted to wanting a specific answer as it will benefit me, but I am not wishing to delude myself if the consequences of it includes my *inaction * being referred to as fraud.
Okay. I feel it is important to say that I appreciate all the helpful answers as I will consider them. All there is left to do is first call my hs. I might have to email my college because I literally work all day. Ultimately, I will decide on a path that most works for me and aligns with what I will be told. The scholarship isn’t even worth that much so this feels too complicated. At this time, despite if I came off too combative, I will like to say that I think everyone pretty much covered my options. If you have anything new to add or some more details, you are free to post. But, I just don’t want it be 3 more pages of everyone saying the same thing.
MSU (College of Engineering) appears to be the OP’s college.
I wouldn’t trust what a high school teacher says. Even high school guidance counselors are frequently wrong.
Do the right thing. You know what that is.
I didn’t say it was common knowledge, but you seemed to know it was required to report the outside scholarship because you asked if it was “technically” required. Required is required, nothing technical about it.
If loans are included in your FA package, it is likely you would be allowed extra scholarships. You need to know the policy of the school and whether it will replace the loans, work study, or grants first.
No, you will not receive the work study allowance as a ‘refund’ you will receive it as a paycheck as you earn it.
This is from the MSU Office of Financial Aid Institutional Awards Policy:
"To comply with US Department of Education regulations, student payments, awards, prizes, and gifts for academic pursuits or achievements must be reported to the Office of Financial Aid when paid for non-employment purposes.
This policy covers all payments, awards, prizes, and gifts for academic pursuits or achievement.
Academic pursuit is defined as any form of award, payment, reimbursement or other transaction to a student for the purpose of aiding his/her education, study, training, or research."
I would say that the OP must report the award. Time to close the thread?
@dragon90 I’d say that is very clear! No way to “technically” be in doubt now.
I went to MSU. Yes, you MUST report the scholarship. End of story.