<p>So my D has received a couple of outside scholarships so far. One is an Elks which I believe will be given to her directly (local) and one is a local private scholarship- she received the check a couple of days made out directly to her.</p>
<p>So do we have to report these on D income tax next year? Should I make copies of the checks as proof? Or if they came directly to her do we NOT have to report them? How does this affect her taxes next year?</p>
<p>Check with a tax professional on tax matters.</p>
<p>In my (non-tax professional) experience based on having a similar situation and researching the matter, and discussing with our tax person:</p>
<p>Scholarships/Grants that go to pay tuition/fees/required books are non-taxable. The portion of those scholarshps/grants that goes to other things, like room/board & miscellaneous expenses, IS taxable.</p>
<p>You or D will get a 1098T (I think that's the number) from the providers of the scholarship. Next year on D's taxes, you'll report the taxable portion, only, on the line indicated in the instructions. For us it was line 7 on the 1040, indicating "SCH" on the line next to the amount. Search the IRS site for specfic instructions.</p>
<p>THEN on FAFSA-- the amount you reported to the IRS it gets reported as income for D, but you deduct that amount on worksheet C, so there's no net increase in assessed income from scholarships. So scholarship money doesn't hurt your aid in the following year.</p>
<p>ooh thanks!</p>
<p>It's not likely that you'll get a 1098T from the Elks, or the PTA or any other small local organizations! I think colleges want you to report all scholarships to them if you have needbased aid, so that they don't overaward you aid. That being said, most colleges give you loans, so the little local scholarships would just serve to reduce those loans a bit. My son got a check for $250, made out to him, and the organization said that he should cash it and use it for whatever he wants; clothes, books, anything. To me, that seems more like a gift than a scholarship! He'll report it to the college, but I don't think it needs to go on a tax form.</p>
<p>do a search for a post written recently by taxguy on this very issue.</p>