<p>To any parents fortunate enough to be getting very substantial scholarships, if the scholarship covers tuition room and board, is this taxed and if so do you file your child as an independent then? Please help</p>
<p>Any scholarships and grants in excess of tuition, fees and books and supplies(the books have to be required by everyone in the class) are taxable. See IRS publication 970 for more thorough details of what is not taxable.</p>
<p><a href="http://www.irs.gov/pub/irs-pdf/p970.pdf%5B/url%5D">http://www.irs.gov/pub/irs-pdf/p970.pdf</a></p>
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if so do you file your child as an independent then?
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Do you mean file for taxes? It would probably depend on the $ amounts involved and if there is other income or tax paid by the child. My daughter had other earned income and had had taxes deducted. We filed a tax return for her and the taxable scholarships/grants were declared on that. She got most of her taxes refunded. We still claimed her as a dependent on taxes.</p>
<p>If you are asking about FAFSA - you cannot file her as independent unless she can answer yes to one of the dependency questions. The taxable scholarships/grants will appear as income on the AGI but you include them on worksheet C so they will be deducted by FAFSA so as not to affect the EFC.</p>
<p>I'd like some advice on this too. I'm not sure if my situation is different from pollyo's, but maybe someone has some experience with this. I recieved a 10k scholarship which consisted of a 10k check written to me (which I apparently could do anything with), and I put the money in a CD so that I could get as much out of it as possible. Obviously it's going toward tuition, which the accountant I talked to said should be untaxed, but I got a tax form thing from the scholarship people last week, so I'm not sure if I have to file or not. I don't work or have any other income, so the only reason I would file would be this scholarship, but I don't want to do it if I don't have to. (Sorry for butting in on your thread, pollyo.) Advice?</p>
<p>First - I am not an accountant so if you have an accountant his advice is best.</p>
<p>My understanding:If you received the $10,000 in 2007 and your tuition/fees/books paid in 2007 exceeded $10,000 then the scholarship should not be taxable (assuming you have no other scholarships/ grants and that the scholarship does not specify that it has to be used for costs other than tuition/fees).</p>
<p>One thing to note is that you cannot 'double dip' with the same exemption - that is you cannot also use those same tuition/fees as qualified expenses for 529 account withdrawals or other tax breaks - Hope tax credit etc. Also you must take into account all scholarships and grants (if you get financial aid such as Pell, ACG you have to add all the grant money and the scholarship money together to make sure they do not exceed the tuition/fees )</p>
<p>Try this thread for some help.</p>
<p>Or here</p>
<p>More here</p>