<p>We also assigned a portion of my D’s scholarships/grants in excess of tuition/fees/books to her income. It totaled close to $8000. After the $5700 deduction, the taxes weren’t too bad. The killer taxes were our state taxes!! Don’t forget that you very well may need to pay state taxes, depending on your individual state laws. Our state’s standard deduction is quite a bit less than $5700, so her taxable income was higher for state taxes. In the end, though, we still saved more on our taxes than we paid for her taxes. That made it worthwhile.</p>