Well you probably paid too much in taxes last year. This should have been reported on her own tax return. She gets $5700 standard deduction, so the first $5700 is tax free (and probably would not have required a tax return last year). This year she should file her own return. If her income including the taxable part of scholarships is over $5700, she will need to file a return.</p>
<p>Does any of her scholarship specify that it is for tuition? If so you can not use any of the tuition paid for with the scholarship for a tax credit. My daughter has a 2 part scholarship. Part is a full tuition waiver. So we can’t use any of her tuition for the tax credit. The other part is a cash scholarship that can be used for any expenses. So we use that for non qualified expenses (like room and board) making it taxable income to her, and use her fees and books for the tax credit (and we pay her taxes).</p>
<p>The only items we used for the tax credit was books/supplies - not much.<br>
So, I guess she/we will be doing her first tax return this year? :(</p>
<p>Yes. If she can be claimed as a dependent by you she still gets the standard deduction ($5700) but cannot take a personal exemption ($3650). When you claim her you take a dependent exemption ($3650)</p>
<p>The personal exemption and dependent exemption are kind of the same thing except when you take it for yourself it is called a personal exemption, when you claim someone else as a dependent it is called a dependent exemption. </p>
<p>You probably overpaid taxes last year by reporting her scholarship on your taxes. I don’t know if it is worth it to you to correct that or how easy/difficult it would be.</p>
<p>I’m new to this and looking at two scholarship offers. If I have a full tuition and fees (at state U) scholarship plus 3K towards housing and 5K towards other expenses per year do I pay taxes based on the 8K less the standard deduction? If I have a full tuition plus 3K expenses at a more expensive private school would the tax benefit make the private school a better bargain? Also can my folks still claim me as a dependent if I have a full tuition and fees plus 8K a year scholarship do they meet the 50 percent rule?</p>
Yes, they can. Scholarships do not count toward you providing more than 50% of your own support.</p>
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Yes (plus any other income of course)</p>
<p>
What tax benefit? You won’t really be eligible for any tax benefit if you have full tuition. Any taxes you might owe on the taxable part of your scholarships will not be high enough to make one school a bargain compared to the other. Plus what are the cost of other expenses at the private school, room and board etc?</p>
<p>If by “tax benefit” you mean the fact that you wouldn’t have as much taxable income generated by taking the private school’s offer, you should consider that the tax is generated by having more grants is going to be far less than the other costs you’d pay at the private school. So, it would be a matter of being penny wise and pound foolish, from a purely financial standpoint.</p>
<p>Thanks. The basic costs at the private school are 10k room and board plus any increase in tuition and fees and books. The state school covers increases in tuition and fees. My basic costs would be about 2k towards room and board plus books per year.</p>