<p>I am ready to submit but am worried about one thing. It asks for scholarships. My D received over $20,000 in scholarships and grants this year, as reported via 1098-T. BUT she goes to NYU which of course costs wayyyy more than that. My adjusted gross income is about the same as last year, but with this scholarship stuff in the mix, will our EFC go up accordingly? I noticed it does not ask you anywhere about the cost of attendance, which would certainly counter the scholarship money......:{</p>
<p>When I called FAFSA about this they told me to enter the scholarship $ as earned income and then again on the scholarship question - which seems to in effect add in and then subtract that amount.</p>
<p>There are better explanations on this (Kelsmom and Swimcatsmom) but I found the wording on the online FAFSA form less than optimal and I understand your confusion!</p>
<p>Someone who knows more can answer better. But, my understanding is that the scholarships to be worried about are the ones where some work is required as a condition of the grant. (Eg, grad school research.) In that case, it may be earned income. Ordinary financial aid is not earned income. I think I researched the actual IRS directions the first time I ran into this. The 1098T is meant to qualify you for Hope and Lifetime Learning credits- you can google.</p>
<p>They don’t ask about COA because attending an expensive school is a choice.</p>
<p>Quote from another forum: If your daughter’s grants and scholarships didn’t exceed the cost of attendance of the college she is attending they do not need to be reported on the FAFSA. If, for some reason they DO exceed the actual cost of attendance, then you only need to report the amount of the scholarship that exceeded the cost of attendance.</p>
<p>The 1098T should show both grants and tuition, not room/board. No?</p>
<p>
No, that is completely wrong. Any grants (including need based grants such as the Pell) and scholarships used to pay for unqualified education expenses are taxable income. Qualified education expanses are basically tuition, fees and required books. Scholarships/grants used to pay for those are non taxable income. Scholarships/grants used to pay for unqualified expenses such as room and board are taxable income. They are taxable to the student, not the parent. The relevant IRS publication is IRS 970.</p>
<p>You basically have to use the 1098T and your own records to determine how much of your scholarships were used for qualified expenses such as tuition, fees, and required books (and therefore do not have to be reported) and how much were used for unqualified such as room and board, travel, non required books (and are therefore taxable income to the student). Whether a tax return is actually required will depend on the total of the students income and whether he/she is required to file.</p>
<p>If the student is required to file a tax return then the taxable scholarship/grant will be included in the student’s AGI from the tax return. Another question on FAFSA asks how much of the student’s AGI is from taxable scholarships and grants. You report the number here and in the EFC formula it is deducted from the student’s AGI, so it does not affect the EFC at all.</p>
<p>If none of the scholarship/grant money was used to pay for unqualified expenses, then none of it should be reported anywhere on FAFSA. ONLY the taxable part is reported - as part of student income, then again where it asks how much of student income is from taxable scholarships/grants.</p>
<p>So, if a scholarship meets tuition only, and a student IS required to file (1099 income,) no part of the scholarship would be reported? Thus, it’s not in the student’s AGI used for the Fafsa?<br>
Sorry that I jumped on the OPs question too soon.</p>
<p>If the scholarship is all used to pay for tuition then none of it would be taxable, none would be reported on a tax return, none would be reported on FAFSA.</p>