<p>Okay, so have read and read, and just cannot wrap my mind around how to do this. </p>
<p>DD has more scholarship money than tuition </p>
<p>Sorry, for some reason, I'm having trouble posting......try again....</p>
<p>Okay, so have read and read, and just cannot wrap my mind around how to do this. </p>
<p>DD has more scholarship money than tuition – we did draft of 1040 to come up with figures for FAFSA. </p>
<p>Only reported as income (on her 1040) the amount of scholarship that was over the amount of tuition. </p>
<p>When filing FAFSA, listed total scholarship on Worksheet C. When I went to submit FAFSA, it pops back up and tells me that because of the amount entered on Worksheet C, it appears that I have not entered enough on the 1040. </p>
<p>Now I’m wondering if we did this correctly – if FAFSA is picking it up as a red flag, will the IRS also?</p>
<p>The tuition/fees/required books portion of the scholarship is tax free. Here's what IRS says about how to report this:</p>
<hr>
<p>Reporting Scholarships and Fellowships</p>
<p>Whether you must report your scholarship or fellowship depends on whether you must file a return and whether any part of your scholarship or fellowship is taxable.</p>
<p>If your only income is a completely tax-free scholarship or fellowship, you do not have to file a tax return and no reporting is necessary. If all or part of your scholarship or fellowship is taxable and you are required to file a tax return, report the taxable amount as explained below. You must report the taxable amount whether or not you received a Form W-2. If you receive an incorrect Form W-2, ask the payer for a corrected one.</p>
<p>For information on whether you must file a return, see Publication 501, Exemptions, Standard Deduction, and Filing Information, or your income tax form instructions.
How To Report</p>
<p>How you report any taxable scholarship or fellowship income depends on which return you file.
Form 1040EZ. If you file Form 1040EZ, report the taxable amount on line 1. If the taxable amount was not reported on Form W-2, enter “SCH” and the taxable amount in the space to the left of line 1.</p>
<p>Form 1040A. If you file Form 1040A, report the taxable amount on line 7. If the taxable amount was not reported on Form W-2, enter “SCH” and the taxable amount in the space to the left of line 7.</p>
<p>Form 1040. If you file Form 1040, report the taxable amount on line 7. If the taxable amount was not reported on Form W-2, enter “SCH” and the taxable amount on the dotted line next to line 7.</p>
<hr>
<p>So you only report the taxable portion to the IRS on the 1040-- what's left after you deduct tuition/fees/required books.</p>
<p>Now, Worksheet C asks you to (from the instructions):</p>
<p>"Report any student grant and scholarship aid reported to the IRS in your AGI."</p>
<p>So you'd only report here the portion of the grant/scholarshp that you reported to the IRS as part of your income. So this amount cannot be higher than your income as reported on the 1040. And the FAFSA munchkins check to make sure you didn't make an error by overreporting grant/scholarship money here (apparently a common error).</p>
<p>So don't list the total scholarship amount on the worksheet/</p>
<p>YES! Now it makes sense - that's what I did wrong - I listed the full amount on the worksheet.....now if FAFSA will let me correct that.....</p>
<p>Thanks so much sblake7!</p>
<p>Ur quite welcome. :)</p>