State in which taxable excess scholarship should be declared

[rgosula]

<p>Child's permanent residence is in California
Child's college in Massachussetts</p>

<p>Regarding the taxable portion of the scholarship declared on federal tax:</p>

<p>Should a California state income tax be filed just because of this?
Should the scholarship be declared on the state income tax?
Should the scholarship be considered to be "earned" in Massachusetts?
Scholarships are a combination of merit and federal aid.</p>

[Madison85]

<p>Hmmm, well if scholarship excess is considered to be unearned income, then I’d say it is taxable only in the home state of California. </p>

[4kidsdad]

<p>

Should the scholarship be considered to be “earned” in Massachusetts?

Good question. No I don’t think so for non-resident on taxable scholarships that are NOT derived from any “teaching, research or other services.” See <a href=“http://www.mass.gov/dor/businesses/help-and-resources/legal-library/directives/directives-by-years/1990-1999-directives/directive-95-9-tax-treatment-of-scholarships.html[quote]For”>http://www.mass.gov/dor/businesses/help-and-resources/legal-library/directives/directives-by-years/1990-1999-directives/directive-95-9-tax-treatment-of-scholarships.html

For</a> non-residents, however, the tax treatment of scholarship and grant amounts is limited. Non-residents are taxed only on items of gross income that are derived from or effectively connected with any trade or business, including 1) any employment carried on by the taxpayer in the commonwealth; 2) the participation in any lottery or wagering transaction within the commonwealth; or 3) the ownership of any interest in real or tangible personal property located in the commonwealth. G.L. c. 62, § 5A(a). While G.L. 62, § 5A mentions items of gross income from “sources within the commonwealth,” the statute defines “sources” in terms of activities that occur in Massachusetts. Therefore, scholarship and grant amounts that are derived from or effectively connected with “teaching, research or other services” carried on by a non-resident in Massachusetts are includable in Massachusetts gross income and subject to Massachusetts personal income tax, regardless of whether such amounts are paid by a granting organization located within or without Massachusetts. The location of the payor or grantor is irrelevant. It is where the activities are carried on by the grantee that determines taxability of such amounts. Scholarship and grant amounts that are received by a non-resident and specifically designated for use for living expenses, however, are not subject to Massachusetts personal income tax, since they are not connected to an activity specified in G.L. c. 62, § 5A(a).

</p>

[soxfan99]

<p>You should check the rules in Mass and California. The Mass rules say…</p>

<p>Nonresidents are required to file income tax returns with Massachusetts if their Massachusetts gross income (derived from sources within Massachusetts) exceeds either $8,000 or the prorated personal exemption to which they are entitled, whichever is less. Nonresidents file Massachusetts Form 1 NR/PY- Nonresident/Part-Year Resident Individual Income Tax Return.</p>

<p>The formula for the prorated income and other information for Mass non-residents can be found at <a href=“http://www.mass.gov/dor/individuals/filing-and-payment-information/guide-to-personal-income-tax/filing-requirements/who-must-file.html#Nonresident”>http://www.mass.gov/dor/individuals/filing-and-payment-information/guide-to-personal-income-tax/filing-requirements/who-must-file.html#Nonresident&lt;/a&gt;&lt;/p&gt;

<p>Hopefully your child’s income is low enough to not require filing.</p>

[rgosula]

<p>Looks like only need to file California Income taxes.</p>