<p>While trying to figure out my taxes this year I began to wonder if a full ride was ALWAYS a good deal. IRS only lets you claim tuition and fees protion of a scholarship as tax free, Hope and Lifetime credits only let you claim tuition and fees (even though these wouldn't apply with a full ride), which leaves you with often a hefty room and board/expenses/stipends part to be declared as income. Am assuming the non tax free part of the scholarship would be declared as the student's income. Just wondering.</p>
<p>Well I would rather pay any % under 100% so it seems it would be a good thing. Say my kids tax rate is the lowest (10% ? - I can't be bothered to go check) and her room and board is $8000 I would rather pay $800 in taxes than $8000 for room and board.</p>
<p>So, let me get this straight.</p>
<p>If a student gets a full ride scholarship, they have to claim on their taxes the amount of $$ it costs for room/board/expenses as income? </p>
<p>Just need to know because my D has to make a decision in the next few weeks whether or not to accept a full ride athletic scholarship. Does the school issue some type of 1099 form or something? How are the figures arrived at? </p>
<p>Not that I'm complaining, but I need to remember this next year if she does accept it.</p>
<p>Here is the link to the IRS section on scholarships:</p>
<p>And yes...the scholarship portion used for room, board, travel, etc. must be claimed as income by the student on his/her return. In the case of partial scholarships, they are usually first applied to tuition, then fees, then books and supplies. Any amount left after these items are paid for then go towards room and board, etc. and are taxable.</p>
<p>Yes, the school issues a 1099 for the grant/scholarship money.</p>
<p>Think of it this way - would you turn down a raise because you have to pay taxes on it? That's all that this "taxable scholarship" is. So yes, in my mind, a full ride is always a good thing.</p>
<p>But if the room and board for Year 1 of college counts as income, does that amount then show up the following year on FAFSA as income the student has available for Year 2?</p>
<p>Seems like if you've spent the R&B in Year 1 (and had to pay taxes on it), it's not available for Year 2.</p>
<p>The Grants and Scholarships show as income on the tax return, and those figures are carried over to the FAFSA. But they get deducted via Student Worksheet C. So Grants and Scholarships don't contribute to the Student (or Parent) INCOME portion of the FAFSA EFC.</p>
<p>Now, any unused Grant or Scholarship money that remains in a Student account when the FAFSA is completed, would count as an ASSET, and WILL adversely impact the EFC.</p>