<p>We never bothered with 529s. I don’t like the idea of giving control of investments to someone else. It looks like it’s a tax headache too.</p>
<p>^^^
Not only is it a tax headache, the Virginia 529 doesn’t pay dividends or capital gains. The only way you get more money out than you put in is if the value per share goes up, and we’re just now overcoming the losses of the past few years. I think I would have been better off just stuffing the money under my mattress! Sure, I have to pay tax on the dividends and capital gains in a regular mutual fund, but at least they buy me more shares.</p>
<p>
Yes I am sure it happens. if the total income, including the taxable portion of scholarships/grants, is below the standard deduction then there is no need to file a return (unless it is to get a refund of any tax paid on other income).</p>
<p>
If the student has to file a return and taxable scholarships/grants are included in the AGI then the AGI is reported on FAFSA. FAFSA Question 44d asks for taxable scholarships/grants included in the students AGI. These are deducted from the AGI in the EFC calculation so they do not affect the EFC. If there is no requirement to file a tax return then the scholarships/grants are not reported on FAFSA at all. Only if they are included in the AGI.</p>
<p>Thanks swimcat.</p>
<p>But it’s a good idea for your son or daughter to fill out a tax form… most colleges require it and it’s useful for filling out the fafsa and profile</p>
<p>So, if a student has 10,000 in scholarships but only 6,000 is used for tuition and fees, would he need to claim $4,000 income on the student tax return (as room and board do not count) AND could the parents still claim one of the tax credits (AO) for supplies, books, course material, and equipment because the student also has a loan and paid put of pocket for these expenses? </p>
<p>Any more knowledge or experience to add here would be appreciated - is it possible to have a taxable scholarship and a tax credit the same year?</p>
<p>Pete, as I understand it, yes. Last year we (parents) claimed our son as a dependent, and what he paid and what we paid towards his qualified expenses was included in the Hope Credit.</p>
<p>On his own tax return, he declared the amount of scholarship money he received that exceeded tuition & fees and did have some tax due – which I paid for him. It was a couple hundred dollars, if I recall.</p>
<p>This thread makes not getting any scholarships a little easier to take- at least my taxes are one step easier.</p>
<p>^^^^you sound like a glass half full kind of person :D</p>
<p>I think I have this figured out.</p>
<p>Scholarships Totaled $18,915
Eligible charges were - $16,950</p>
<p>Books + Lap Top $1,700</p>
<p>So does that mean that the taxable portion </p>
<p>Scholarships - tuition - books,etc = taxable</p>
<p>$18,915 - $16,950 -$1,700 = $265 is taxable </p>
<p>And then $$$ paid $5,300 is paid out of our pocket.</p>
<p>And do I do this on my taxes or son’s taxes.</p>
<p>Am trying to help my son fill out the FAFSA. He received a 1099 because monies were paid to the university on his behalf. Does this need to be entered on the FAFSA? Many thanks!</p>