I’m senior in College. I am claimed as dependent by my parents return and I file my tax return as a single, unmarried. Just got a doubt whether I need to include scholarship on my tax return. I get outside scholarship and from the school. I believe you have to include non qualified expenses ( such as room and board) to your income. Is this correct?
I know every year we pay about $25K expected family contribution from our pocket. That means we are not getting scholarship in excess of tuition fees therefore don’t need to include that on return. Can someone verify this?
If your total scholarship amount received for the tax year is not more than the total qualified education expenses for the tax year, than generally the scholarships are not taxable and are not reported on the student’s tax return.
I say generally because there are all sorts of circumstances that could change this. For example, if one of the conditions of a scholarship is that it must be used for a non-qualified expense (such as travel, room and board, or EC activities), that would make it taxable, even if the total amount of the scholarships received was less than the qualified expenses.
For example if your parents are claiming $4,000 of your qualified education expenses such as tuition, fees and books towards the AOTC (American opportunity education credit), then the same $4,000 of QEE cannot be used to determine the tax-free status of a scholarship.