My daughter is a college student and she won a scholarship from Capital One bank. She used that money to pay her tuition. Now the bank sent her 1099-Misc form and list the money in Box 3 as “other income”. When I file her tax with turbotax and fill in the 1099-Misc form the whole amount becomes fully taxable. My understanding is that any scholarship money that is used to pay tuition is not taxable. So here are my questions:
- Is this scholarship money taxable?
- If the money is not taxable, how to file it in turbotax and to make it non-taxable?
Thanks very much for your help!
I believe you only include the amount on the tax form that is NOT used for Qualified Educational Expenses.
But hoping the tax experts pipe in!
How large is that amount compare to the tuition? Do you have other scholarships/grant that would exceed the QEE? If you report that as your daughter’s income, you may claim the tax credit as you would pay the tuition out of your pocket. The question is whether the money is really in a scholarship or some kind of cash prizes. Did you report that to the financial aid office?
The scholarship is $2500 and the tuition is $9000. It does not exceed the QEE. She has no need based financial aid and I don’t think she need to report that to FAO. The question is how to file that 1099-Q in TT. Thanks!