State Tax Question on Scholarship

<p>University paid for son's dorm through a scholarship. He also received a one-time $2500 NMF scholarship from the NMF Corporation. We/he just filed a federal tax form for the scholarship money received above the cost of his tuition minus qualified expenses. I believe we have to file a state form also. Just double-checking that we need to file a state form for him from the state that the university is located (we live in another state). What about the $2500 NMF...can that be included in that OOS University tax form too (I think NMF is located in Evanston, IL....not the same OOS university state.)</p>

<p>One more question for next year. He did not work in 2012 but he plans to work in our home state in 2013. When filing next year, would we have to file one for the University state and one for our home state? Thanks for any clarification you can give on these questions.</p>

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Interesting question.
No you don’t. I think you or your son “earned” taxable scholarship at your home state (tax home). Just like reporting interests and dividends from banks & companies located in other states.</p>

<p>I don’t have experience with this. If I were in this situation I would be combing the Department of Revenue websites for each state trying to find the answer. It could vary by the states involved. If I couldn’t find the answer I would be calling. Unlike the feds which consider taxable scholarships earned income, my state considers it unearned income. My son has always paid more to the state than the feds because of this. Since we live in the state where my son goes to school, I haven’t researched whether it being considered unearned income would affect where it needs to be reported. I think you need to research your states, I don’t know that there is a general rule.</p>

<p>For 2013 when he works, he would need to file in the home state if he makes enough to be required to file. </p>

<p>Perhaps if you name the states, someone with experience with or knowledge of those states could give you a better answer.</p>

<p>^^^^My son goes to the University of Alabama. We live in Wisconsin.</p>

<p>No need to file taxes in Alabama:</p>

<p>[UAB</a> Financial Affairs - S/F Alabama](<a href=“Financial Affairs | UAB”>Financial Affairs | UAB)</p>

<p>^^^^Thank you so much for finding this link for me. This means we will just have to file in Wisconsin…makes life much easier!</p>

<p>Well I can confirm that Wisconsin considers taxable scholarships/grants not reported on a W-2 as unearned income so the Wisconsin standard deduction will be much smaller than if it were earned income.</p>

<p>I would give the Wisconsin Department of Revenue a call to make sure it is reportable in Wisconsin, but knowing our state, it likely is. :)</p>

<p>Disclaimer: I don’t know anything about Wisconsin.</p>

<p>My daughter has to file in California because we claim her as a dependent and we live in California. She spends maybe 4 weeks a year here on all vacations combined and doesn’t earn any money in California but still has to file and pay taxes because she is our dependent. She earns income in Philadelphia as a student there and files a Pennsylvania tax return but Pennsylvania doesn’t tax scholarship income. Otherwise she would be paying fed taxes, California taxes, and Pennsylvania taxes on her scholarships. I believe the only way she can avoid the California taxes (which are high) is if we stop claiming her as a dependent on our taxes.</p>

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You should get a tax expert to review your taxes. Your daughter should able to claim some credit on her CA return because she paid PA taxes.</p>

<p>That and losing her as a dependent on your return will probably cost you more than it will save her.</p>

<p>4kids and 3bm - yes and yes. Yes, she gets a credit on CA for taxes paid in PA. And yes it is better for her to remain an independent right now. Thanks for the reminders :)</p>