Scholarship/tax question

Colleges and Universities A-Z University of Alabama
1

<p>Oh experienced UA parents! I have a question about D’s scholarship & taxes. </p>

<p>She received her 1098-T from UA. Box 2 (amounts billed for qualified tuition and related expenses) is the same as Box 5 (scholarships or grants.) On the flipside where it shows the breakdown, it doesn’t show the room cost/scholarship.</p>

<p>I was under the assumption that the room, laptop & stipend would be taxable, but it doesn’t seem to be broken down that way. Will she be getting a second form? Or do we just file using this?</p>

<p>Thanks in advance!</p>

2

<p>I may be wrong but for the last three years, my son has not claimed any scholarship funds on his tax returns. </p>

<p>It is my understanding that the students are to claim scholarship money and/or grant money that EXCEEDS the actual costs directly related to school.</p>

3

<p>From what I’ve read, you owe tax on any amount over the cost of tuition, fees, books, and mandatory supplies. It’s quite possible that UA didn’t report that on your 1098-T. I know that they don’t include fees for Bama Bound and Alabama/Outdoor Action which are both mandatory fees (Alabama Action and Outdoor Action are for-credit classes.) Scholarships for housing, a laptop, and stipends are taxable. I’ve been meaning to contact financial aid to see if there’s a way that Alabama taxes wouldn’t need to be paid, but theoretically your D does owe State (possibly AL, but certainly TN if there were an income tax) and Federal taxes on the excess amount.</p>

4

<p>*you owe tax on any amount over the cost of tuition, fees, books, and mandatory supplies. *</p>

<p>Yes and no.</p>

<p>If your child’s total earnings (from job and taxable scholarships) are below the taxable threshold amounts, then the student doesn’t pay any taxes. </p>

<p>If your child’s total earnings exceed the amount, then the student is only taxed on the amount that exceeds the threshold.</p>

<p>I can’t remember what the threshold is…somewhere around $5k or so? Anyone know?</p>

<p>There is some amount that if the student earns below, he doesn’t even have to file a tax return.</p>

5

<p>So is there a 2nd tax form that UA sends out that says how much the student “received” in terms of the housing and laptop?</p>

6

<p>I don’t recall having to declare the laptop…maybe we didn’t and should have…lol</p>

7

<p>wait - whoa!
so student’s scholarship amt. is treated the same as actual income and they combine to make total earnings?</p>

<p>If that’s the case then any Pres. scholarship winner automatically exceeds the ($5,500) threshold and would have taxes due on the surplus amt.</p>

<p>Will have to ask my Dad about this, he’s an EA (enrolled agent)</p>

8

<p>Reread what has been written.</p>

<p>a presidential scholar reports NOTHING…that is for tuition. tuition scholarships are NOT taxed.</p>

9

<p>I misread the intent of the 1098T which was sent. That’s to prove that WE paid tuition and how much was covered by scholarship in case we qualify for the tuition credit. My mistake.</p>

10

<p>Bet you’re relieved.</p>

11

<p>definitely, not a problem with him paying his fair share since he works/earns as much as he does, but didn’t want to see him penalized for earning a scholarship :)</p>