FAFSA Question! Student grant and scholarship aid reported to the IRS

Paying for College
1

<p>The question is:
"Grant and scholarship aid reported to the IRS:
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."</p>

<p>Information:
I'm a bit (okay, really) confused about taxes in general, since I've never done them before, and I didn't think that I had to do them this year. I earned less than $3,000 at my job this year: I'm single, dependent, and my parents don't file a tax return either.</p>

<p>I got some scholarships/grants on the 2012-2013 FAFSA; in addition, I applied for a bunch of scholarships and got three scholarship checks: two $1,000 scholarships and one $3,000 scholarship.</p>

<p>I used the $3,000 scholarship and one of the $1,000 scholarships on this past fall semester, and am using the other $1,000 scholarship for this upcoming spring semester. </p>

<p>From the fall semester, I received a refund check of $800, which I'm going to use as well for the upcoming spring semester.</p>

<p>Questions:
- Do I have to list any of these scholarships under the FAFSA question about grant/scholarship aid reported to the IRS (either the scholarships/grants I got from the FAFSA last year or the outside scholarships I received)?
- Are scholarships considered earned or unearned income? If it's unearned, then I would have to file a tax return, I think.</p>

<p>I've tried researching this stuff, but I seem to keep getting different answers. :p I appreciate any help I receive from this thread!</p>

2

<p>Yes, it gets confusing when you have earned and unearned income. For the scholarship amounts that your received in 2013 (not awarded but actually got), you can apply tution, fees, books, required course materials against them, and only the amount that is left gets reported as unearned income. So it’s crucial to note whether you actually got the checks for those scholarships in 2013 or if they were just awarded and will be cashed in in 2014. </p>

<p>It appears to me that you are under the $6100 threshhold for the year, especially when you net out your scholarships and will not owe taxes.</p>

3

<p>

You parents should file tax returns if they have earned incomes and also have dependent. They may qaualify for Earned Income Tax Credit. See [EITC</a> Home Page–It?s easier than ever to find out if you qualify for EITC](<a href=“http://www.irs.gov/Individuals/EITC-Home-Page--It’s-easier-than-ever-to-find-out-if-you-qualify-for-EITC]EITC”>http://www.irs.gov/Individuals/EITC-Home-Page--It’s-easier-than-ever-to-find-out-if-you-qualify-for-EITC)</p>

4

<p>

You may have $1,800 of taxable scholarships. See [Publication</a> 970 (2013), Tax Benefits for Education](<a href=“http://www.irs.gov/publications/p970/ch01.html#en_US_2013_publink1000178003]Publication”>http://www.irs.gov/publications/p970/ch01.html#en_US_2013_publink1000178003)</p>

5

<p>Okay, I’m trying to understand this the best I can.</p>

<p>1) I received the $800 refund check in October, but I still haven’t cashed it. I’m planning on cashing it very soon, though.
2) I sent the other $1,000 check to my university in like November and told them to put it on the 2014 spring semester tuition bill, which they did in November.
3) On my 2012-2013 FAFSA, I received (I’m only a freshman, so these are only fall 2013):
Scholarships listed on the FAFSA (excluding the outside scholarships that were previously mentioned): $1,500
Grants: $4,868</p>

<p>Does this all have to be put on the FAFSA? (The aid the FAFSA gave me + the outside scholarships)
I feel stupid for asking all this, but I’d rather be safe than sorry.</p>

6

<p>

You still receive this $800 as scholarship in 2013 October.

You report it on FAFSA only if you reported it as taxable scholarships on your tax returns that you filed.</p>

7

<p>@4kidsdad
My parents get Social Security disability money, so they don’t have to file taxes. </p>

<p>So if that $1,800 is taxable, that gets included in the gross income? Which would bring my earned income up to like $4,800… so I still don’t have to file a tax return or do I? I believe I’m still below the threshhold that the other answerer mentioned.</p>

<p>EDIT:
“You report it on FAFSA only if you reported it as taxable scholarships on your tax returns that you filed.”</p>

<p>If I otherwise wouldn’t have to file a tax return… nothing gets reported on the FAFSA then? Or does it?</p>

8

<p>See [Publication</a> 501 (2013), Exemptions, Standard Deduction, and Filing Information](<a href=“Publication 501 (2022), Dependents, Standard Deduction, and Filing Information | Internal Revenue Service”>Publication 501 (2022), Dependents, Standard Deduction, and Filing Information | Internal Revenue Service). If you have income tax withheld from your pay checks, you should file tax returns to get it back.</p>

9

<p>Shadowmist, we really try to avoid giving specific tax advice here because there is so much involved that cannot be explained. For instance, all of a sudden whe find out your parents are on ss disability. We don’t have all of the things in front of us, so to give erroneous tax advice is really doing a disfavor.
4Kidsdad has given you some sites that you can research and we have given you some basic guidelines that can help you as read the instructions of the IRS publications. You can also get all of the paperwork in hand and go to an IRS office and ask for help. Make sure you have all of the dates, payments, bills, checks, refunds, deductions from your accounts.</p>

<p>The way it works is on a cash basis pretty much. What you actually GOT, not promised in an award letter but was sent to your account at school or in a form of a cashable check (whether you cashed it or not) is what you were awarded in 2013. Not what you were promised, but what you got. </p>

<p>What you actually paid–what the college actually took out of your account is what you can deduct if it is tuition, fees, books, supplies. So if the college took a payment in November for your attributable to your spring charges, that is still a tution payment. The check, the money you got back in 2013 even though uncashed is what you received in grants for 2013. So it’s actual money that you get in check or credit form that counts,</p>

<p>I don’t know your state laws either ,and it may benefit you to file whether you owe anything or not. </p>

<p>For FAFSA purposes, you do not report scholarship money unless you have filed taxes and have to put in the amount that you reported, but then there is a section on the FAFSA where you subtract them back out again, so that it nets out to zero for FAFSA income purposes in terms of grants. Any awards for college including work study does not get counted for FAFSA purposes. Workstudy does count as earned income for tax purposes. But if you are under the taxable threshhold it is a wash, and you don’t owe taxes.</p>

<p>It 's a good exercise to fill out the forms because they provide a track record and you will gain expertise when the time comes that you exceed the limits and have to file and pay taxes on some awards.</p>

10

<p>@cptofthehouse
Wow, thank you so much! It’s just a bit overwhelming considering I’ve never had to deal with this before, and then suddenly it’s all just thrown at you, and I’m trying hard not to mess up somewhere.</p>

11

<p>If your parents do not need to claim you on their taxes, then you can claim yourself, adding $3900 personal exemption to the $6100 standard deduction, for a $10,000 shelter before taxes.</p>

<p>As someone else suggested, file as you might get a refund if any amount was withheld for taxes. My daughter, who only made about $1500, will get $93 back.</p>

<p>If you are confused, gather up all your W-2s and 1099s and 1098s and take them to a free tax advice clinic. Most colleges have them with the business students providing free advice. If not, there might be some in your community.</p>

12

<p>CPT, please remember this the next time this comes up:</p>

<p>

</p>

<p>IRS Pub 501, page 3</p>

<p><a href=“http://www.irs.gov/pub/irs-pdf/p501.pdf[/url]”>http://www.irs.gov/pub/irs-pdf/p501.pdf&lt;/a&gt;&lt;/p&gt;

<p>OP, the amount of your refund is irrelevant. Add up all the scholarship/grant money that was credited to your account in 2013. Then add up the tuition, mandatory fees and required books and supplies that were billed to your account in 2013 or in the case of books/supplies that you bought elsewhere in 2013. Subtract the 2nd total from the first and if the result is positive, then that is the amount that is taxable.</p>

<p>If you have a taxable amount, that amount is what you enter in response to the fafsa question you posted.</p>

<p>You would only have to file if the total of any job income, interest/dividend income and taxable scholarship/grant amount is greater than $6100. However, if you had any tax withheld from a job, you would want to file to get the amount withheld refunded to you.</p>

13

<p>THere are also college tuition credits and deductions that may come into play since you are not on your parents returns. You do need to go to a pro at the IRS with all of your info, payment dates receipt of amounts and a good understanding of the IRS publications–read up on them, and have them go through all of this with you. </p>

<p>Thank you , Annoyingdad for the correction. As you can see, OP, the info here may not be 100% correct, and you need to know this cold for your own sake.</p>

14

<p>

See [Free</a> Tax Return Preparation for You by Volunteers](<a href=“http://www.irs.gov/Individuals/Free-Tax-Return-Preparation-for-You-by-Volunteers]Free”>http://www.irs.gov/Individuals/Free-Tax-Return-Preparation-for-You-by-Volunteers) “Find a VITA Site Near You”</p>

15

<p>@annoyingdad
That really helps! Since I live in the dorm/have the meal plan and that was billed to my account, that gets added in the part of tuition/books as well?</p>

16

<p>No, R&B are not qualified education expenses(QEE) in determining taxable amounts, only the things I listed.</p>

17

<p>No. Room and board is not considered part of the education expense you can apply your scholarship towards for tax exempt status. Only tuition, fees (lab fees, course fees, material fees, recreation fees, registration fees, etc), text books and required supplies (computer if required by a course, for example), are deducted. Room and board are living expenses.</p>

18

<p>^See [Publication</a> 970 (2013), Tax Benefits for Education](<a href=“http://www.irs.gov/publications/p970/ch01.html]Publication”>http://www.irs.gov/publications/p970/ch01.html)

</p>

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<p>

</p>

<p>The fees have to be required of all students as a condition of enrollment. It would depend on the nature of a recreation fee as to whether it would be included. A computer also has to be required as a condition of enrollment in a school or course of instruction, not just for one course.</p>

<p>Shadow, if taxable scholarships/grants apply to you it would be a really good thing to fully understand this. Chapter 1 of IRS Pub 970 discusses this. 4kidsdad gave the link in his prior post. It’s heavy reading at times but you sound very capable, so it’s only a matter of will to understand it. :)</p>

20

<p>Okay, thank you for the list!</p>

<p>EDIT:
@annoyingdad
I’ll give it a read and see how it goes. The financial jargon is a bit hard to understand, that’s for sure, which lead to me making this post. :P</p>