<p>My son received his 198-T and it lists in box 5 the scholarship amount.</p>
<p>I am filling out his FAFSA. The scholarship amount goes under "Student/Spouse" on Worksheet C, correct? I am pretty sure it doesn't go under "Parents" but now that I am filling out the dang thing, I am second guessing myself!</p>
<p>Right. The scholarship money counts as income on the student's tax return, then you list it here so it gets deducted from student's income for purposes of FAFSA calculations (so last year's financial aid doesn't hurt your aid the next year).</p>
<p>What if your child isn't filing a tax return? My DD earned less than $1000 and it was work study $. She was not planning to file a tax return. What do we do about her university award (mix of merit scholarship and FA grant)? I'm not sure but I think my DH may have included it on our taxes and her FAFSA.</p>
<p>Best to get tax advice from a tax professional.</p>
<p>As I understand it, if you showed the scholarship funds as income on the parent's tax return (and therefore included those funds as parental income on FAFSA), you should list that scholarship amount in the Parental section of Schedule C, so that the scholarship amount doesn't adversely impact financial aid.</p>