<p>We are using HR Block at home software, and in going through it for one student there were no issues..but for student 2...Form 8615 was triggered. It seems to be calling the taxable scholarship money INVESTMENT INCOME. The only difference I can see is that for student 1, the taxable scholarship amount is under 1900, and the student 2 is over 1900. I didn't expect to run into this and in researching it on these forums, someone else mentioned it and others posted that it is WRONG to call it Investment Income...anyone else using HR Block have this issue??</p>
<p>I don’t use H&R Block and from posts on this forum and reviews I’ve read, I never will.</p>
<p>$1900 is where the kiddie tax can kick in, but you are right, taxable scholarships should be reported on the W-2 wages line and are considered earned income by the IRS, not investment income. State could be different.</p>
<p>Are you saying for student 1 it put it on the W-2 wages line but for student 2 treated it as investment income? If so I would double check all the answers you gave. If it treated it as investment income for student 1, though not enough for the 8615, then there is a fundamental coding error.</p>
<p>You can see if others are having this problem, but I would contact H&R support.</p>
<p>Taxable Scholarship Amount is declared on the Child’s return, not yours.</p>
<p>My son had $3,000 of taxable scholarships. Using Tax Act, it showed up correctly on HIS 1040-EZ Line 1 (wages).</p>
<p>I believe it went on wages for student 1, but I will go over it all again tonight. I did call HR Block and they could not answer my question with out using my “ONE free tax pro question”…and I may come up with more difficult problems before we are done with all 3 tax returns. lol
OperaDad- I AM putting the taxable scholarship amount on the students return. </p>
<p>I think this is our last year with HR Block.</p>
<p>Same thing happened to me. My last year with H&R Block too. Have spent hours trying to get them to recognize the problem. Seems like it happened to me a couple weeks ago when I did an update. Suddenly it dropped the scholarship income reported on 1040 line 7 into line 1 of the 8615. Have been trying to find out if something changed in the tax laws. Didn’t have this problem last year. Relatively the same amounts taxable - about $8k room and board. I’ve had “experts” in other forums confirm it should be considered earned income. Guess I’ll have to paper file, not trusting what would go with the efiling option.</p>
<p>Thank you for posting…I don’t understand why we don’t hear of more people having this issue. HRBlock is still trying to find the reason/answer, so I will give them credit for that…but we have already solved the issue ourselves…that student filed with TaxAct and all looks correct.
We used the free version,available online. We chose the “download” version, not the “online” version, and efiled…for free.</p>
<p>I’ve used TaxAct for at least 8 years. Started with the free download version but the last 5 or so have bought the deluxe federal plus state for $19-$21. Once you understand the questions using the extra help available and why it asks for certain info on both the student and parent returns, it does a slick job of coordinating taxable scholarships on the student return with the AOC on the parent return. Also handled coordinating declaring part of a 529 distribution’s earnings taxable to the student with the AOC on the parent return. I would never pay the price for TurboTax.</p>
<p>
Please tell us if H.R. Block find the problem/solution or not.</p>
<p>I ran across the same problem and I had a lengthy online chat with their tech support. Needless to say, it has been escalated to a higher level and I should hear back from them within 3 days.</p>
<p>Glad you started this thread. I helped my daughter and son-in-law do their taxes on TaxAct after reading earlier posts about Turbotax problems with the education credits. I found it pretty user friendly. Think I’ll stick with TaxAct myself after reading this thread!</p>
<p>I have the same problem with H&R Block putting taxable scholarships in “investment income.” I used their tax advice service (used my one free session) and got the following answer. They believe the IRS intends taxable scholarships to be considered unearned income. I couldn’t get them to budge on it. They have not considered it this way in the past. I’ve used their software for at least 6 yrs where they didn’t treat it this way. In fact, when I roughed my taxes out a month or two ago it wasn’t treated that way. When I opened my software today and updated it…there it was. I am NOT happy with any of this. I ended up using my “free” session to get this answer. It comes down to the interpretation in form 8615 of…Earned income. Earned income includes wages, tips, and other payments received for personal services performed. Form 8615 also includes the following definition of “investment income”…Investment Income For Form 8615, investment income includes all taxable income other than earned income as defined later. Investment income includes taxable interest, ordinary dividends, capital gains (including capital gain distributions), rents, royalties, etc. It also includes taxable social security benefits, pension and annuity income, and income (other than earned income) received as the beneficiary of a trust. Scholarships are not mentioned specifically in either one of these definitions. I’d be interested in anyone else’s experiences. I believe this is a real grey area.</p>
<p>IRS 970 instructions are quite specific about how taxable scholarships are treated. They go on the same line as earned income and SCH $xxx is written in the space to the left.</p>
<p>I’m baffled by why HR block would decide to treat it differently to how the IRS specifically says it should be treated. It does not seem at all grey to me.</p>
<p>And social security is not investment income and is not treated or taxed that way. It has its own very complicated set of rules.</p>
<p>We didn’t accept the “that’s the way it is” response, and they transferred us to a “higher” HRB representative. That one tried to say the same thing and I asked WHERE on the IRS site, or anywhere, do you see that scholarship money is unearned income?? She couldn’t find it in writing so they escalated the issue and said we would hear back in 3 days. It has been TWO WEEKS today. They did call us at the one week mark to say they are still looking into it. LOL In the meantime…we used a different company, efiled, and received the refund…</p>
<p>If I were using them, which thankfully I am not, I would refer them to IRS publication page 6. Presumably they are doing the same to their in store victims, er, clients.</p>
<p>or you could refer them to their own page
[Tax</a> - Taxes and College Financial Aid - H&R Block - H&R Block®](<a href=“404”>404)</p>
<p>where they say
</p>
<p>Thank you swimcatsmom! When we had them on the chat, it killed me because I could not find that info when I know I have read it plenty of times. But that’s when I turned it on them and asked them where they saw the info…and they couldn’t come up with it…IF we get them on the phone again, I have it saved and ready to show.</p>
<p>I would hot them with both - the IRS publication (970) and there own web page. I don’t see how they can argue against the IRS’s own publication.</p>
<p>What a farce. Makes their current TV adds a bit laughable (though the one old guy is quite endearing)</p>
<p>Well, I have to report back that all I got was some canned responses from HR Block and a survey to tell them what I think and I certainly told them what I thought! I had to use TurboTax to solve my problem.</p>
<p>Thanks for getting the IRS publication 970 and even HR Block’s website info. I will try to contact them again and see what they have to say.</p>
<p>From: [url=<a href=“http://www.irs.gov/taxtopics/tc421.html]Tax”>Topic No. 421, Scholarships, Fellowship Grants, and Other Grants | Internal Revenue Service]Tax</a> Topics - Topic 421 Scholarship and Fellowship Grants<a href=“Topic%20421%20-%20Scholarship%20and%20Fellowship%20Grants”>/url</a></p>
<p>“You must include in gross income amounts used for incidental expenses, such as room and board, travel, and optional equipment, and generally amounts received as payments for teaching, research…”</p>
<p>GROSS INCOME Not investment income.</p>
<p>So, I had the same problem. Spent hours on this tonight. Ultimately went to IRS site and read up on scholarships. So, if your child is a going for a degree generally seems the scholarship is not taxable: [Publication</a> 970 (2012), Tax Benefits for Education](<a href=“Publication 970 (2022), Tax Benefits for Education | Internal Revenue Service”>Publication 970 (2022), Tax Benefits for Education | Internal Revenue Service).
So I went back to the page in HR Block and put in 0 instead of 5,000 because the scholarship is not taxable – my son is enrolled FT, working toward a degree at a college, not having to do work study or anything else in order to get the scholarship. When I do that, the Form 8615 vanished. So I think that is the issue. I don’t think the software was clear enough about this (and several other things, sadly, because if you tried to then fill out the Form 8615 it got really screwy, had my son owing $29,000 at one point).</p>