Hello, I’m an undergraduate student who’s filling out the FAFSA right now, and I have some questions about reporting scholarship on the FAFSA.
To start off, I am considered an independent student, so no one claims me as his or her dependent on the tax return.
Now, here are the numbers.
All of my tuition and fees were covered with scholarships and grants. After paying for all that, I received a total refund of $10437 for the year. Then, I spent $609.29 on books and required supplies for classes, which left me at $9827.71. I understand that a single person under the age of 65 has to file taxes if his or her income is above $10150. The taxable portion of my scholarship is $9827.71, and I have no other source of income, so I believe that I do not have to file taxes.
This is where I’m confused. The FAFSA asks the following question.
“Student grant and scholarship aid reported to the IRS in your adjusted gross income. Includes AmeriCorps benefits (awards, living allowances, and interest accrual payments), as well as grant and scholarship portions of fellowships and assistantships”
Recently, I got an email about a 1098-T form, which apparently is sent to the IRS. I will not file taxes myself, but the 1098-T form has some information about my scholarships. However, the odd thing is that the form only includes a portion of the amount I mentioned above.
So my question really is, do I have to report that “$9827.71” for the question on the FAFSA?
The 1098T is only going to show amounts for 2014. Is part of the amount you thought it would be for spring?
As for the fafsa question. If you aren’t required to file a return and don’t, you won’t have an AGI. Therefore you won’t have reported any amount of scholarships and grants to the IRS in your AGI. The thing is, if you do file a return and do have an AGI, the amount you put in answer to that question about scholarships reported to the IRS, is subtracted from your AGI in the fafsa formula so you aren’t penalized by having scholarships and grants for fafsa.
Thanks for the answer. So that would mean that I would enter “0” for that FAFSA question? As for the 1098-T form, the amount seems to include only the HOPE and institutional scholarships, excluding the Pell Grant and scholarships from other organizations, though the number doesn’t add up 100% accurately. Nevertheless, the number is for the whole year.
I will have to find out about that. As you can tell, I am very new to taxes and such due to my special circumstances. However, is paying the state income tax reported to the IRS as well? If not, even if I do pay the state tax, would I still not enter “0” for the question on the FAFSA?
After looking at the 1098-T form again, I have another question. Box 2 (Amounts billed for qualified tuition and related expenses) show $8793, and Box 5 (Scholarships or grants) show $11115. I am not sure why Box 5 has a different amount… Does this mean that, to calculate the amount of taxable income, thus the AGI, I need to take $8793 and subtract it from $11115? The form appears to take a different approach in identifying the amount of scholarships and grants.
Box 2 is the amounts BILLED, that you would have paid out of pocket to the school for tuition, fees (QEE). This box often includes amounts BILLED for the spring semester too. The amount in box 5 shows what the school says you received through them in scholarships and grants.
If these numbers are correct (and only for one semester) then yes, just subtract $8793 from $11115.
The thing is, I received more than the difference in $8793 and $11115 in refund. However, the school seems to only account the $11115. And I know for a fact that the figures are for the entire year because when I add up all the tuition and fees from my account, I get exactly $8793. Should I still use $11115 to calculate the taxable portion? Either way, my taxable scholarship does not exceed the minimum income required, but I just want to make sure for the future.
ignore the 1098T - you need to look at YOUR OWN RECORDS - the financial aid award letter, bursar’s statements receipts for required books/equipment/supplies. Also records of how much you received in scholarships from other organizations.
Looking at my own records, I got $10437 back in refunds, of which I spent $609.29 on books and required items for classes. From that, I calculate a taxable amount of $9827.71, which is still below the minimum income required for a single person to file federal income taxes. I just want to confirm which is the right method, so I can do the right math in the years to come. If you see anything incorrect here, please let me know.
A couple questions. Is box 7 on the 1098T checked? Were you in school in spring and fall of 2014 or only fall? Taxes go by the tax year, not the school year. Also, did you take out any loans? If so the refund amount may have been partly loan funds. The refund amount is kind of irrelevant, what you need to figure out is the amount of scholarships credited to your account in tax year 2014 and the amount of qualified expenses for tax year 2014. The scholarship amount in box 5 will only have amounts credited to your account in 2014. If box 7 is checked, then the amount in box 2 includes expenses billed in 2014 for spring semester 2015.
Okay, I think I get the difference between the school year and tax year. School year starts in the fall, but the tax year starts in January, which explains the halved amount in Box 5. But could you please break down what I have to do?
Yes, Box 7 is checked. I started college in Fall 2014, and I am still in school now in Spring 2015. There are no loans; everything is scholarships and grants. So even though the tax year does not include the Spring semester, since Box 7 is checked, and since Box 2 includes the Spring semester’s costs, do I do $11115 (Box 5) - $ 8793 (Box 2)?
I’m sorry if I didn’t fully understand your statements. I’m just confused about this whole thing because I’ve never done it before.
So you believe $11,115 is the correct amount for scholarships/grants credited in 2014 for fall semester only?
Just for information look at your bills or online student account and see when your spring semester scholarships and grants were credited to your account? I am assuming they have already been credited in January.
The thing you need to determine is the amount of qualified expenses that were billed in 2014 for fall semester. Tuition, required fees and then you can add required books and supplies purchased in 2014. Look at your bills and/or online account for this. Subtract that number from the $11,115 to get the 2014 taxable amount. If you happened to buy any books for spring in 2014, those would also count for tax year 2014.
If your spring scholarships and grants were credited in January 2015, you’re going to need the spring expenses billed in December to offset the scholarships for tax year 2015. You can’t use the expenses for spring billed in December to offset scholarships in both 2014 and 2015. You can’t use the same expenses twice.
Do not worry about the 1098 amounts. They are not likely to match what you need to use. How much money did you GET in 2014. Not what was awarded for the year, but was actually credited to your account. That is your starting figure. From that you subtract out tuition, fees, books, required supplies and other qualified expenses (look up what is includable). You then have the amount of money that is possibly taxable. If it is below the threshhold for which you have to file a return and you have no other reason to file one, then you don’t have to do so.
I’m going to give you an example, with caveats, of what the numbers may turn out to be close to.
If $11,115 is the correct amount for scholarships/grants posted to your account in 2014 and if(big if, may not be true), all tuition and fees for spring were billed in December, then the billed QEE for 2014 would be close to half of the $8793 that is in Box 2 or $4396.50. So your taxable amount would be close to $11,115 - $4,396.50 - $609.29(books) = $6109.21.
You need to resolve whether all tuition and fees for spring were in fact billed in December or were only some. You also need to resolve whether tuition and fees were equal for fall and spring. Perhaps there was an orientation fee that is only billed for your first semester for example. So you need to resolved these possible differences and not simply halve the box 2 amount. You do this by looking at your bills and/or online account.
In Fall 2014, I received $9865 in scholarships and grants. Fall 2014’s tuition and fees were $4409, so I got $5456 back.
In Spring 2015, I received $10615 in scholarships and grants. Spring 2015’s tuition and fees were $5634, so I got $4981 back.
So to clear things up, for the FAFSA, which currently asks for the 2014 tax year, I only need to consider the $5456 from the fall. But for the next FAFSA (2016-2017), I need to take $4981 into consideration?
Spring means nothing. On what day was the $10615 RECEIVED in your account. If it happened in December, it involves your 2014 taxes. If it happened in January, it’s all for next year.
Also, for FAFSA purposes, all scholarships and financial aid received is subracted out. None of that is included as income for FAFSA purposes. Nor are any assets comprised of financial aid proceeds. If you have no other income or assets other than what you got for scholarships, you have a big fat net zero for FAFSA purposes.
Not necessarily so, for form 1040 or tax purposes. But if you “only” got $5456 back from the scholarships, and have no other income, you don’t have to file a tax return, nor do you owe federal taxes. The threshhold is about $6K (look it up for the exact number).
I looked at the latest billing statement which is from November 17, 2014. It includes an ANTICIPATED CREDITS/CREDITS amount of $10115 from scholarships and grants (the $500 from one organization was sent in January 2015, thus adding up to $10615 in the end). However, looking at the latest account activity, $8115 of the scholarships is dated January 12, 2015. Does this mean that the $8115 is for 2014 or 2015? I’m confused because $10115 showed up undder the anticipated credits/credits In a billing statement from 2014, but the specific dates on the account activity are from 2015.
I’m aware that the threshold is $10150 for a single person under the age of 65. The spring scholarships showed up on a billing statement from November 2014 but are listed as anticipated credits/credits. Also, on the account activity, $8115 is dated January 12, 2015. Does this mean that I received the $8115 on January 12, 2015?