I’m still learning so please “bear” with me (a little Cal humor). I would appreciate any help if you are knowledgeable about taxable scholarship money. My daughter received a great scholarship that covered her tuition and part of her room and board but I just learned that room and board do not count as qualifying education expenses so the portion of the scholarship money that she used towards room and board could be taxable income. I’m not quite sure how to handle this… my tax software says that she might have to file taxes to claim that portion of her scholarship as income (about $2500) but when I tried to use the software to file her taxes, it won’t let me enter info from the 1098-T because we claim her as a dependent on our taxes. We’re not trying to claim an education credit on her return, I just thought that’s where the scholarship income could be shown. Do any of you have experience with this?
She also received a W2 for income she received from her on campus work study job. This amount did not exceed the work-study amount in her aid package so it should not be considered taxable (and it was less than $600). However, she did receive a W2 for that. If we claim both of these as income for her, that would bring her total income to about $3100 and unless I’m figuring this incorrectly, I don’t believe there would be a tax on that. BUT I want to do this correctly so if you have knowledge on this, I would appreciate your comments.
Thank you!!
Sorry, I do auditing, and not tax, so my tax background isn’t the best. Yes, it’s definitely taxable if it pays for room/board. The scholarship would only be tax-free if it paid for tuition/other expenses beside room/board.
Since her total income is going to be $3100, it is below the exemption, so she would get most/all of her money back (if the work-study already has deductions, but i doubt it). It might be most efficient for you to use the 1098-T on your income since you probably make more than her. Yes, it is your daughter’s, but you would be getting more out of using it as a tax credit instead of your daughter…any tax people in this forum to confirm? you might want to double check with someone more familiar with tax haha.
Here’s a link on how to enter it into Turbotax, not sure if this helps, since I don’t use TurboTax to file my taxes
https://ttlc.intuit.com/questions/1900852-what-is-form-1098-t-tuition-statement
@totalcaprice Thanks for the tips, I really appreciate it!
Just FYI Our tax software indicated that while we’re eligible for education credits, neither of us can claim any of them because the scholarship exceeded tuition and the cost of books and things she needed for class. Since room and board don’t count as education expenses (she has to live on campus and the cost of room and board exceeds tuition!) they consider our costs fully covered so we can’t claim any credits. Please let me know if I’m wrong, because I’m just going by what the tax software told me.