The current FAFSA and CSS profile would ask about 2015 income. The CSS profile (I think) also asks about 2016 income.
I have a related question about scholarships/awards when you don’t have qualified education expenses. There seems to be 2 places on the 1040 where such information may be entered:
- Line 7 lumped with wages.
- Line 21 as Other Income.
If you received money that was clearly identified as a scholarship for college, I believe line 7 is where this is supposed to go. From the IRS website: “If all or part of your scholarship or fellowship grant is taxable and you are required to file a tax return, report the taxable amount as explained below. You must report the taxable amount whether or not you received a Form W-2. If you receive an incorrect Form W-2, ask the payer for a corrected one.”
“Form 1040A. If you file Form 1040A, include the taxable amount in the total on line 7. If the taxable amount was not reported on Form W-2, also enter “SCH” and the taxable amount in the space to the left of line 7.”
However, sometimes it’s not clear if money should be classified as a scholarship. For example, the music award my son received was given to 3 high achieving seniors. When I asked about it, because he was taking a gap year, I was told there are no requirements on the money. In this case, it seems like line 7 still seems appropriate since I believe the real intention is for college. However, I did a little research and found some articles indicating line 21 is the place to report money received based on the following on the IRS website:
“Prizes and awards
Subject to certain exceptions, the cash value of prizes or awards won in a drawing, quiz show program, beauty contest, or other event, must be included on the tax return as taxable income. Taxpayers must also report the fair market value of merchandise or products won as a prize or award, as taxable income. For example, both a $500 cash prize and the fair market value of a new range won in a baking contest must be reported as other income on Form 1040, Line 21.”
From a financial aid perspective, does it matter how this money is reported? Seems like it’s better to report it as a scholarship because, as indicated in a post above, you can enter the amount on line 44d and it is taken out of the income for financial aid purposes. I assume it’s similar on the Profile.
Just trying to understand the whole process.
I don’t know about that. If the entity only gives these out to graduating hs seniors, I think it would be ok to report it as scholarship. You could ask a tax accountant.
It’s not like they issued a 1099 form for that payment.
But, yes, we reported my D’s taxable scholarships in the wages line, with SCH and amount next to it.
Above, someone said you don’t have to report scholarships that appear on the taxes because ‘the school will see them on the taxes.’ I wouldn’t rely on that, and now with the prior prior look back, the school may never see the taxes. The school needs to know what the student received THAT year. I had to report the outside scholarships we received in Aug that September (as soon as I had the money I reported it). The school made sure there was still ‘room’ in the COA for the current semester. It could have made a difference in whether loans were subsidized or even whether some grants could be issued because for most school grants you can’t go above the COA in total aid.
The requirement is that you report all outside scholarships when you receive them.
^ @twoinanddone, this student has not attended college yet. He took a gap year, but only the scholarship from the employer could be deferred until the next year. The other two small scholarships were paid to the student. @privateID was asking questions on how to report the scholarships received in 2016 on the tax return, and how they will show up on the 2018/19 FAFSA.