Tax Question - 1098-T & Scholarships?

[retiredatfifty]

So our daughter finished her first semester at college. She lives at home and commutes daily.

She receives a tuition-only merit scholarship directly from the University and also a Bright Futures scholarship from the State of Florida. The University scholarship is not refundable to the student for any portions not used. The Florida Bright Futures scholarship money, however, goes to the school first ... then the school puts any leftover money in her bank account each semester.

The 1098-T reflects she received $1339 in scholarship money (we assume this is Bright Futures) for the fall semester and shows $312 as payments received for qualified tuition & expenses. We know the $312 was for miscellaneous fees the University scholarship does not cover. (the rest, a little over $1k was deposited in her bank account)

So my question is about the merit scholarship she has from the University itself. Is this not reported on the 1098-T because it is a non-refundable tuition-only scholarship? I know her tuition was (or would have been) a lot more than $312. Do I need to worry about it when filing taxes.

Thanks in advance for any advice.

 

[sengsational]

Interesting question. My kids' 1098-T forms had a box for total tuition, and another box for scholarships and grants. I don't have the same 'problem', though...my kids don't get paid to go to college! You might try asking on collegeconfidential.com if you don't get an answer here. It sounds to me like you might get another 1098-T with the full tuition on it? Maybe call the school and see if they have anything besides 'consult your financial advisor'.

 

[retiredatfifty]

Interesting question. My kids' 1098-T forms had a box for total tuition, and another box for scholarships and grants. I don't have the same 'problem', though...my kids don't get paid to go to college! You might try asking on collegeconfidential.com if you don't get an answer here. It sounds to me like you might get another 1098-T with the full tuition on it? Maybe call the school and see if they have anything besides 'consult your financial advisor'.

Box 1 of the 1098-T indicates $312 and Box 5 says $1339. That's pretty much all it says. I know tuition at this school is about $160 an hour for residents & she took 15 hours.

I admit the scholarships & living at home do help our modest ER budget (& leaves me more $ for fishing & motorcycles )

I may call the school soon & see if someone there is inclined to enlighten me. (btw - I am my "financial advisor" - no room in the budget to pay for one!)

The school is University of West Florida. Decent State school, reasonably priced, and small class sizes: http://uwf.edu/

 

[kaneohe]

Perhaps the school netted out the expenses paid by their scholarship and reduced both the fees paid and the scholarship boxes by that amount .
The difference between those 2 boxes feels like taxable income?
see p. J1 here http://www.irs.gov/pub/irs-pdf/p4012.pdf

 

[gindie]

Another great place to ask your question would be at the Savingforcollege.org site:

Savingforcollege.com Forum - Forums powered by UBB.threads™

 

[pixelville]

Check out q17 in the link for your answer.
American Opportunity Tax Credit: Questions and Answers

Since the university scholarship sounds like a full tuition waiver, it has no tax implications and they may not have to give you a 1098-T. The state scholarship on the other hand impacts your tax return. Worth double checking, since my understanding could be wrong.
It is worth understanding the rest also. See if you qualify for American Opportunity Credit.

 

[akck]

My son in graduate school was similar, expense reported around $300. No grant or tuition reported. If you use tax software, just report what's on the 1098-T. It will deduct the expenses and report the scholarship net as income. In my son's case, he's a TA, so a W-2 is involved. Another son had a mis-timed scholarship payment with no tuition expense, so it was all income for him in his last semester.

 

[jimnjana]

You likely won't qualify for the American Opportunity Credit since the total of your scholarships etc are more than the cost of tuition and books and supplies. The money returned to your daughter is not taxable to you, unless your daughter has other income and needs to file a tax return on her behalf. You will pay taxes on the net difference between the amount Box 5 amt on the 1098t and (the box 1 amount plus books and supplies required by the school (including any computer etc required by a course)

Is Florida Bright Futures Scholarship Tax Free? | Finance - Zacks

 

[retiredatfifty]

You likely won't qualify for the American Opportunity Credit since the total of your scholarships etc are more than the cost of tuition and books and supplies. The money returned to your daughter is not taxable to you, unless your daughter has other income and needs to file a tax return on her behalf. You will pay taxes on the net difference between the amount Box 5 amt on the 1098t and (the box 1 amount plus books and supplies required by the school (including any computer etc required by a course)

Is Florida Bright Futures Scholarship Tax Free? | Finance - Zacks

I know we're not going to be able to take the AOC.

You seem to be saying two things here (underlined above) ... first, that the money returned to my daughter is not taxable to me: and then second, that the net difference is?

The article you linked seems to say the unused portion is taxable. Books, Parking sticker, etc were about $500, which we agreed to pay for her ... so looks like the rest will be taxable to somebody.

Can I just have her file it on her own return? The leftover $1000 went straight to a bank account in her name. She had no other income so her return would be so low she wouldn't be taxed on it. It's not really a lot of money to pay tax on ... just wondering how I should do it. Don't want to pay 1 cent more taxes than I have to.

I'm working with Tax Act, but been going back & forth changing things around so haven't yet figured out if this item it affects my taxes at all.

 

[akck]

The income should go on her tax return.

 

[jimnjana]

I know we're not going to be able to take the AOC.

You seem to be saying two things here (underlined above) ... first, that the money returned to my daughter is not taxable to me: and then second, that the net difference is?

..

btw parking doesn't count as an expense. My mistake the excess scholarship money is taxable to daughter provided she has other income requiring that she file, it is not taxable to you.

 

[retiredatfifty]

btw parking doesn't count as an expense. My mistake the excess scholarship money is taxable to daughter provided she has other income requiring that she file, it is not taxable to you.

She has no other income. Can she file anyway?

 

[kaneohe]

She has no other income. Can she file anyway?

She can always file. I think what was meant is that the taxable scholarship belongs to your daughter and if she has other income, there may be a tax.
If no other income ,there is likely no tax.

See p. F2 here http://www.irs.gov/pub/irs-pdf/p4012.pdf