I already posted this in another forum, but I guess it was the wrong one so anyways:
I was wondering if you guys know if we have to pay taxes for financial aid and scholarships? I’m filling out FAFSA for next school year and it is asking me if I plan on filing a tax return, and I have no idea if I’m supposed to. Financial aid and scholarships are my only income other than a few thousand dollars my grandparents gave me and a couple loans. I got about 11,000 in financial aid and scholarships (mostly grants) this previous fall term, and at community college last year I probably got 4,000 or 5,000. Let me know if you need more information, thanks.
Yes, students do have to pay federal taxes on scholarships, grants, work study, job income, earnings from investments under certain circumstances. If you look on this site, you’ll see discussion on this. Recent discussion that goes into quite a bit of detail.
Basically, any actual money (not loan proceeds) that you received for college for financial aid, scholarships,in 2014 (and that means actually RECEIVED, not awarded, but put into your account in the calender year ending 2014) minus what are considered Qualified Educational Expenses (QUEE) might be taxable income. QUEE includes tuition, fees, books, directed supplies needed for a courses. Look it up in IRS publications.
You can earn up to $6200 or so (look up exact amount)in 2014 before you owe taxes to the government. If you have investment income, and other income, you need to read the publications and see what combos you can do before having to file for taxes.
@cptofthehouse
Alright, thank you and I’ll look for that discussion thread.