<p>Since there are so many knowledgeable parents here… Do students have to pay taxes on their scholarships? Even if they would not otherwise file a tax return because they received no taxable income (or under the income level to be exempt)? </p>
<p>Do the scholarships impact the parents taxes in any way?</p>
<p>Adding to waudio’s question – does Alabama send W-2/1099s for scholarships or does the student have to figure out what the value to report themselves? (I’m most concerned about the NMF computer – the value of housing is pretty obvious.)</p>
<p>Waudio – scholarship amounts that weren’t used to pay for tuition, books and fees are taxable income to the student at the student’s rates – in some cases these amounts may not be enough to raise the student’s income to a level at which the student will need to file a return.</p>
<p>Parents’ taxes aren’t affected.</p>
<p>Tuition, fees, and books scholarships are not taxed.</p>
<p>Housing scholarships are taxed (to the student)…BUT…most kids can earn up to about $5k or so without being taxed. The housing scholarship is for about $5k…the super suites amount is not given. </p>
<p>My kids have never had to “pay” any taxes (write a check to the IRS). They’ve always have gotten tax returns even after having earnings from part-time jobs and scholarships.</p>
<p>does Alabama send W-2/1099s for scholarships</p>
<p>Bama sends a tax form for the housing part…I don’t believe the computer is listed.</p>
<p>m2ck… so you’re saying you no longer claim your student on your own tax return once they start getting these scholarships?</p>
<p>We have continued to claim our college students as dependents even though they are/were scholarship recipients. Our oldest’s military service (one year at a US Military Service Academy) reclassified him as an independent student for Financial Aid (FAFSA) yet still allowed us to claim him as a dependent on our tax returns. Once he graduated from college, we could no longer claim him. Our senior at ALABAMA will remain a dependent as long as he is a full time student during grad school. </p>
<p>Criteria for a student’s dependency status on the FAFSA are independent of a student’s dependency status on a parent’s Federal & State Tax Returns.</p>
<p>*m2ck… so you’re saying you no longer claim your student on your own tax return once they start getting these scholarships? *</p>
<p>We still claim our child. Did I write something that suggests that we don’t?</p>
<p>DD received a full COA scholarship.The difference between the scholarship amount and the “qualified tuition and related expenses” on the 1098t was approx $11,000. Since she had no income, the first $5700 she did not have to pay taxes on. The remaining $5300 she had to pay both federal and state taxes on which was about $700. I still claim her on my tax return.</p>
<p>m2ck… no, it’s just me being a little dense again. 
I just assumed that if the child files their own return that the parents could no longer claim them as a dependent on their own return. Sorry about that. I see that momof3boyz and njblue still claim theirs as dependents as well. I’ll get the hang of this stuff eventually. ;)</p>
<p>Thanks everybody for that info, BTW! :)</p>
<p>* I just assumed that if the child files their own return that the parents could no longer claim them as a dependent on their own return.*</p>
<p>Oh…no no. lol As parents, we’re still contributing a lot.</p>
<p>Once a kid has a job, even at 16 flipping burgers, they file tax returns (usually to get the refund). That doesn’t mean that the parents can’t claim them.</p>
<p>That said…until a kid earns about $5k or so, he has no fed tax liability. And after that, it’s still low. Even with scholarships added onto part-time job incomes, my kids always got a tax return.</p>
<p>How would the additional $2500 on the Engineering Scholarships be taxed - it will be used for books and fees but there’s no designation on the scholarship. Thanks!</p>
<p>Keep your book receipts. Your fees will have a record. You’d subtract those amounts.</p>
<p>That said, the 2500 is under the 5000 (or so) income threshold, so by itself it wouldn’t have a tax obligation anyway. How much will you earn each year?</p>
<p>* The remaining $5300 she had to pay both federal and state taxes on which was about $700.*</p>
<p>Do you know what the breakdown was…fed vs state? Some states have high rates, while some don’t.</p>
<p>One thing to note for taxes is that if you paid for Spring Semester 2012 (current semester) in 2011, those charges will be on the 2011 1098-T form. If changes were made in 2012 for the current semester, those charges will be posted on the 2012 1098-T form.</p>
<p>Also, I have not heard if the excess scholarship money is taxable in Alabama (which would get the majority of the state income taxes) and then in the student’s state of residence. Unless things have changed in the past year, the non-resident Alabama tax forms cannot be submitted electronically and payment is by check in April or May. It may be possible to claim that the taxable scholarship funds were not paid in Alabama, which could save some students, especially those who are residents of states without a state income tax, a good amount of money.</p>
<p>DD paid $570 in fed taxes and $145 is state. She paid NJ state taxes which is where we live and did not have to pay any state taxes where the school is located. My accountant said it all depends on which states are involved because certain ones have “agreements” when it comes to taxes.</p>
<p>DD paid $570 in fed taxes and $145 is state.</p>
<p>Did she have any other earnings that year? or just scholarships?</p>
<p>Just scholarships</p>