<p>I think I have seen this addressed here before but I couldn’t find it. My wife’s employer offers all kids of employees a tuition benefit/scholarship of up to $5000/year in our case. We must submit a tuition invoice to claim this benefit. If next years criteria is similar to this years my son will qualify for full tuition from UA. On the website the scholarship description is:
“Students who have a 32-36 ACT or 1400-1600 SAT (critical reading and mathematics scores only) and at least a 3.5 cumulative GPA will receive the value of tuition for four years.”</p>
<p>Since it is worded as “value of tuition” would we receive an invoice that showed the tuition?</p>
<p>Some employers will only cover tuition. So, if you don’t actually have a tuition bill, they would not give you any money. IOW, you can’t use the money for room and board. We have friends who’s employer covers 70% of tuition. Kid gets a $10k merit award which school puts toward tuition. This leaves a tuition bill of $20k so employer will give 70% of the $20 k.</p>
<p>The scholarships from Bama are not tuition scholarships, they are scholarships for the value of tutition. It is worded as such so that if a student receives an outside scholarship or reimbursement earmarked for tutition they still receive the award. If tutition is $10K and a student receives an outside award of $5K towards tutition, then that will be applied first, if the student has a 100% award from Bama for the value of tutition, they still recieve that full $10K. They then will recieve a check back from the school for $5K (minus any other fees that are due). That money can then be used for room and board or any other expenses, however if it is used for room and board or any other expense that is not considered an approved educational expense by the IRS, then the amount used for those non-approved expenses is taxable income.</p>
<p>This appears to be a change to prevent students with large scholarships, but low out-of-pocket educational expenses declaring part of their scholarship money as income and having their parents claim a larger education credit.</p>
<p>Watch out for this when preparing your student’s tax return – I’ve run sample returns on Turbo Tax, H&R Block, and Tax Act and none of these programs has generated the Kiddie Tax form with regard to the taxable portion of scholarships. Each of these programs still treats taxable scholarship income as earned income despite this year’s changes to the instructions on form 8615 that for the first time include taxable scholarship income as unearned income for purposes of the Kiddie Tax. (For the 2013 NMFs – since there is no housing scholarship for this group beyond this year at least this is the only year we have to deal with this – small consolation!)</p>
<p>My student’s are going off for the first time next year, so I am trying to figure out how to work the tax situation</p>
<p>An above post says "The scholarships from Bama are not tuition scholarships, "</p>
<p>My understanding is that you can get a federal tax credit for the tuition part of your bill, but not for room, board, books…</p>
<p>Question:
For federal tax purposes can I report that the Bama scholarship is for room and board, etc… and the money I put in is for the tuition portion?</p>
<p>Again, this is all new to me, so I could use any and all advice. My kids quality for the Zell Miller at University of Georgia, which is only for tuition, so the ability to get this tax credit might make bama a the cheaper option.</p>
<p>TurboTax updated its forms last week to take into account the IRS’s abrupt change from “investment income” to “unearned income.” Our daughter’s tax liability on her return (which I had almost completely) jumped from around $600 to over $2200, because her “excess” scholarships are being now taxed at our marginal rate. Her overall marginal rate last year was 3.2%. Her rate this year is 16.5%. </p>