“Sorry to sound uninformed, but are outside scholarships taxable?”
ALL scholarship money that exceeds the cost of tuition, books and fees is taxable - even the money that you might get from the school to help cover the cost of your room and board.
I am sorry for your situation, but you need to do the LEGALLY correct thing, which is to report the scholarship to the school and to the IRS. If the school finds out that you lied, you could lose ALL of your financial aid from the school, not just some of it. If the IRS finds out that you hid money, you will be in all kinds of legal mess and owe penalties and interest on that tax due.
@blossom I think I see what you’re getting at here, but that won’t work in my case. It’s a memorial scholarship, so some guy died and left a lot of funds to a local organization, and they give out awards every year in his name. And no, he didn’t go to my school.
The only thing left for me to do is “a) stand up to my parents” OR “b) let them do whatever they want and hope for the best”.
@KKmama Even if it’s just for personal expenses such as books, toiletries, laundry, recreation, etc.? Do awards have to be reported if they’re under $10,000? I’ve never filed taxes in my life and I would be required to fill out ONE form just for a scholarship? That seems unfair.
Also, would the organization have to file taxes on the award too? I’m really confused.
I would think that the scholarship committee would report these funds to the IRS? If so, I don’t see how you would get away with it. It is income.
I’d report it. The college could find out and boot you out. Or, they could have you pay back money at a later date. Then, what do you do you don’t have the money to return? Drop out of school?
“You’re 18? Yeah right, that’s just a number. Come talk to us when you have your own place and your own bills. Until then, you follow our rules. If you don’t like it, then GET OUT.”
Nice people, right?
I don’t totally disagree with your parents on this. It’s true, unless my 18 son ( really 19) can support himself and lives in our home and we are paying his tuition then he follows our rules. We are not mean about it, but seriously if one if going to throw around being 18 and im an adult, then be one and show us. The majority of 18 year olds can’t survive on their own without parental help.
Before you buy luggage, check to see whether shipping your clothing the cheapest way possible (check US Mail, UPS, Fedex) may cost less than the fees the airlines are charging these days for overweight baggage, especially when you take into account the cost of the luggage. Then you can just fly with a small bag containing a few days of clothing.
^im not sure the adults are being adults here though…
OP: any charity must file a Form 990 with IRS. They don’t pay taxes. It is for informational purposes to the IRS. It tells the who the charity paid, what income it made (investments) and whether it still qualifies as a nonprofit. So the IRS will know. She may think no one will know, but with what I am hearing about her judgement, are you willing to risk being kicked out of school, still having to pay the $ back and being charged with fraud?
Under $10000? Seriously? If AT&T pays you a dividend over TEN DOLLARS it is reportable…so yes. And yes, if the other grants/scholarships fully pay tuition, this one may be taxable to you. If you have no other income, it may not be taxable, but your parents probably claim you as a dependent, so…
I’m sorry, but this is despicable, as they want you to commit federal fraud. Yes, if you get any other federal aid, it is probably mail or wire fraud not to include this $, meaning a felony to not report this. (Dont ask me why, but they generally pick those 2 offenses to charge ppl with for this. I’m not kidding.).
If your mom needs money while you are in college, say no, bc you don’t ha e any extra. Yours will be going to the school.
@HRSMom After careful consideration, I’ve decided that I AM going to report the scholarship and totally ignore my parents. Like you said, they’re telling me to commit federal fraud and I can’t allow that to happen. Yes, they’ll be mad, but once it’s done they won’t be able to do anything about it (except take it out on me, but that’s a different story!)
“@KKmama Even if it’s just for personal expenses such as books, toiletries, laundry, recreation, etc.? Do awards have to be reported if they’re under $10,000? I’ve never filed taxes in my life and I would be required to fill out ONE form just for a scholarship? That seems unfair.”
Yes, if the money is spent for personal expenses it is reported as income to the IRS and you owe taxes on it. Just like when you are an adult, all of your income, not just what is left after expenses, is subject to income tax. And any income of any amount is reportable. I am a pastor, and I have to report every tip I am given after a wedding, every Christmas gift, and stuff like that.
Ask an adult that you know and trust to help you figure out the taxes. You would be better off setting aside money from this scholarship to put toward those taxes now, so you are not looking to come up with a tax payment in April. Your state could get snarky and expect you to pay estimated tax installments now - look up your state tax laws.
Show your parents these comments so that they know we are trying to keep you out of BIG trouble.
Best of luck to you.
“I have to ship everything and bring what I can with me on a plane (hence the need for huge suitcases).”
Don’t get yourself an entire new wardrobe, just enough to start school. This is especially important moving to a different climate. Wait until you know what you really will need. More than one student has shot their budget on things that were all wrong for the new location.
Likewise, don’t buy umpteen sets of new linens and towels and then drag them off to college. Get only the bare minimum (two sheets, one pillowcase, one thin light blanket, one towel, one washcloth) and pick the rest up after you are at school. You will be surprised how long you can survive with no more than that! If there is a Bed Bath & Beyond in your college town, you can order the rest of what you think you might need and have it delivered there, then only pick up and pay for (and use all those BBB coupons if you have a bunch of them) what you do decide you really do need. Or you can do like Happykid, and hit the thrift shops for $1 bath towels and $3 comforters.
If you still believe that you need huge suitcases, check the thrift shops near you (should run you no more than $5 to $10 each), or look for inexpensive dufflebag type pieces at Target/Walmart/Kmart (check the sports section as well as luggage). Duffles are good because they don’t take any space when you unpack them.
As for the new bank account: Your parents don’t even have to know you opened it if you do open it in your home town unless you tell them. Or you can just pack the check in your wallet, and tell them that you are going to use it to open the new account that you “have” to open at your college/university.
If you’re scared of being kicked out, you could talk to the scholarship donor/company about this. Explain what’s going on w/your parents, and ask them to send the check straight to the school. They’ll appreciate your honesty and do as you asked.
Then tell your parents that the scholarship people decided to send the check straight to the school. It doesn’t matter why they decided, they simply did.
You can also open an online account. My kids all have accounts at Capital One 360 (formerly ING). My college kid has never needed a different account. Checks are deposited with her smart phone and free ATMS are everywhere including her campus store and most drug stores.
However, do NOT show your parents the comments here. They won’t care about our opinions and you don’t need to tip your hand.
Open an account near your college and keep the bulk of your money there. Don’t tell your parents it exists.
Ask the scholarship people to direct deposit the checks in your new account. If your parents ask, just tell them they haven’t been mailed yet. Since a direct deposit is electronic they won’t be mailed ever, but they don’t need to know that.
Try to get summer work on campus. Look into being an RA starting as a soph, just in case your mom won’t let you go home.
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Say my mom wants money from me and I’m away in college. I can’t very well tell her “no” and then expect to come home for the holidays.
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If you move the money to a separate acct, she won’t know how much money is in there. If she asks for “proof” as to how much is in there, you can always “prepay” the school for an upcoming semester to drain your acct.
Once the money is an acct that is yours along, your mom will know that the jig is up. She won’t know what’s in there, she won’t know how it’s spent, etc.
Have you already deposited that scholarship check? If not, don’t.
With parents like this, you’re going to need to have a strict filter. Do not tell them much. If you get money, don’t tell them. If you earn money, don’t tell them.
Do NOT offer info. Learn how to be diplomatically vague. Your money is needed for college.
If your mom wants money while you’re away from college, you don’t just say “no”…that will upset her. You say something like, “gosh mom, I wish I had the money to give you but my FA went to paying for tuition.” (or something like that).
If you just say “no”, then she’ll take that as you being selfish. Dont’ say “no”. Just say that you wish you could help, but you can’t.
You’re an adult now. You are under NO OBLIGATION to tell them the truth about your finances. One thing that people don’t realize is that you’re under no obligation to tell people the truth if they ask a question that is NOT THEIR BUSINESS.
I’m rather stunned that the same posters who criticize parents for not sharing financial info with children are now telling the child that she should tell her parents it is none of their business what she does with her financial aid or other money. You can’t hide money in another account as it may get missed when they are reporting income and assets for things like medical insurance subsidies. You have to work together. Be strong. I agree that the problem is solved by telling the scholarship committee the check needs to go directly to the college or be made out jointly to the student and college. The outside awards MUST be reported, especially if there is other aid from the college. It may change whether a loan is subsidized or not, and that is federal fraud if you accept a loan without having reported all sources of income, awards, and need based aid. It appears we are talking about thousands of dollars here, so you can’t just say you forgot.
You will need your parents for financial aid in the next 3 years. You will need them for taxes, and they may be able to benefit from a tax credit too, but it would mean your reporting more income and maybe paying taxes on it. Work together.
Another option might be to ask the financial aid officer to send a letter to you and your parents ‘reminding you’ to report all outside scholarships and the consequences if you do not. That may have more influence on your parents.
^This. There are adults out there that can help you figure out how to finess this without getting you or your mom in trouble, or getting your mom mad at you. Maybe your FA officer can just email you congratulations on winning the scholarship, and asking for details…
I don’t think needing parents’ financial info. requires adults to make it easy for their parents to steal from them. There’s no reason OP can’t keep an account and manage her own money. You can’t work with people whose rules are do whatever I say/want or you can’t come home. OP has to take steps to make sure she has an emergency fund for if/when that happens.
If your parents’ income is <$10,000 (as you wrote in another thread), how do they live on a day-to-day basis? Who is paying for mortgage/rent, food, clothing, health insurance?
