Does anyone know if the maximum amount that can be reported in
“Taxable college grant & scholarship aid reported to IRS as income (q. 43d)”
is capped or limited by some percentage of
“Student’s 2019 Income Earned from Work (q. 38)”
or
“Student’s 2019 Adjusted Gross Income (q. 36)”?
TIA
Joe
If a student reports income earned from work that is greater than the AGI less the amount of taxable scholarships reported, it will probably trigger an error. This is because income earned from work is used in the formula to compute employment taxes; there are no employment taxes associated with taxable scholarships.
I understand what you are saying, but there seems to be a disconnect between your explanation and:
From Publication 970: Tax Benefits for Education
How To Report: How you report any taxable scholarship or fellowship grant income depends on which return you file.
Form 1040 or 1040-SR. If you file Form 1040 or 1040-SR, include the taxable amount in the total on line 1. If the taxable amount was not reported on Form W-2, also enter “SCH” and the taxable amount on the dotted line next to line 1.
Yes, you put the scholarship amount on that line of the tax form. But when you answer the FAFSA question about income from work, you remove the scholarship amount. So you’ll have the AGI from the tax form for question 36, the amount earned from work (W-2 income) for question 38, and the scholarship amount that was reported on the tax return for 43d.
Shucks, that did not work!
Sorry, you can’t embed media items in a post.
Did I enter the amounts correctly?
I tried to use the features above to upload and paste an image of the error message, but I received the following response:
Sorry, you can’t embed media items in a post.
Do you know why I cannot use the features offered?
Thanks!
Joe
You’re very welcome, @joeh84 . I know that the FAFSA instructions aren’t really clear on this. I worked in financial aid until recently, though. Hopefully, making the updates will allow the FAFSA to go through.
You won’t be able to upload a screenshot. Can you tell me what you put in 36, 48 and 43d? And what the error message said? By the way, error messages don’t always prevent you from submitting. The message might pop up a few times, asking you if you’re sure, but often you can just say yes & eventually it will let you move on. If you entered things correctly, you’re fine despite the error messages.