1098-T does scholarship (including room and board) beyond qualified expenses need to be reported? If so- I am a dependent- is this reported on mine or parents return?

[mikaelataxes]

I received a college scholarship through the Army ROTC; 1098-T shows I received about  $4,000 more in scholarship than the reported qualified expenses (the scholarship included room & board). Room & board is a taxable scholarship benefit; however I also found (outside the IRS website) that if the difference is less than a certain amount (including my W2 earnings) this does not need to be reported (I could not find references to this on the IRS websites). I am trying to clarify that this excess would be reported on my tax return (and because it was below a certain amount- it did not need to be reported); or was this excess supposed to be reported on my parents return?  I am claimed as a dependent on my parents return.

[Hal_Al · Accepted solution]

ROTC scholarships and the service academies are specifically exempted from taxation  in the tax code.  So the scholarship and the monthly stipend student-cadets receive from ROTC  are usually exempt from tax.

ROTC scholarships usually only covers tuition, fees and course materials (books). It sounds like you have other scholarships, in addition to ROTC. There is an option, in the ROTC program,  for you to choose the ROTC scholarship to be for room and board, if you already have other scholarships paying tuition. I can find no source saying that the ROTC scholarship is still tax free in that situation. In fact, most sources infer that it is taxable (http://www.ehow.com/info_8747258_tax-treatment-rotc-payments.html). 

(Answer revised)

[TaxGuyBill]

Thanks.  I know that the "stipends" were not taxable, but I didn't realize (or forgot) that the scholarships were not taxable either.
<a rel="nofollow" target="_blank" href="https://www.irs.gov/publications/p970/ch01.html#en_US_2015_publink1000178026">https://www.irs.gov/pu...>

[mikaelataxes]

Not to muddy the waters; but looking at publication 970- I see that armed forces HEALTH professionals are exempt. Also, I am not attending a military academy (but my college has an ROTC branch).  I cannot find anywhere in IRS documentation regarding the not to exceed value of $6300. (that would be helpful- just for piece of mind). Appreciate the help!

[Hal_Al]

ROTC money is tax free;  just like the service academies.

The $6300 rule is probably not applicable in your case. However, for anyone else reading this: it is also not specific to scholarships. It is only the income level at which a student dependent will start owing tax. So, $6300 is the usual filing requirement for a dependent ( a dependent with investment income or self employment income has a lower threshold)

[Hal_Al]

"1098-T shows I received about  $4,000 more in scholarship than the reported qualified expenses (the scholarship included room & board)".
ROTC scholarships usually only covers tuition, fees and course materials. It sounds like you have other scholarships, in addition to ROTC. There is an option for you to choose the ROTC scholarship to be for room and board, if you already have other scholarships paying tuition. I can find not source saying that the ROTC scholarship is still tax free in that situation. In fact, most sources infer that it is taxable (<a rel="nofollow" target="_blank" href="http://www.ehow.com/info_8747258_tax-treatment-rotc-payments.html">http://www.ehow.com/info_8747258_...>). As such, I have changed my answer above.

[mikaelataxes]

The room & board is actually noted as a waiver by the college rotc; on the 1098T statement, that was not reported to the irs because the statement says the amounts do not require reporting

[Hal_Al]

How was it noted on the 1098-T? In what section of the 1098-T?  Based on that, it would appear you are safe in not reporting it as income. Whether it is taxable or not does not appear to be clear cut.

[mikaelataxes]

box 2 lists qualified expenses, box 5 notes the total scholarship amount (tuition & room/board). There is a second page that lists the details of details of how much was considered tuition, room, and board and there is some difference as to whether it was "ROTC" or from the college ROTC. I only found this 1098-T information my looking on my account on-line. There is a note stating the information is a representation and that the 1098-T will not be sent to me or the IRS as the amounts do not require reporting. (I would agree it's not clear cut- that's where my confusion comes in- publication 970 says room and board are taxable, but then I hear that if it doesn't exceed a certain amount- that it would not be taxed. And if it's taxable- why wasn't a 1098-T sent to the IRS?)

[TaxGuyBill]

EDIT:  See other answer for special rules for ROTC scholarships.

Yes, it is reported on your tax return, not your parents' tax return.

However, in most cases, if your total income (including the taxable scholarship) is less than $6300, you are not required to file a tax return.

In the event you had self employment income of over $400, or had more than $350 of other non-earned income (interest, dividends, capital gains), that could require you to file a tax return, even if your total income is under $6300.

[mikaelataxes]

Thanks-Bill. Hal has also been providing some help, which is appreciated (but this still seems a little unclear with some of Hal's latest input. Is there any IRS publication that states the less than $6300? unless I overlooked it (although I have read it a few times now) I could not find it in publication 970.

[TaxGuyBill]

The $6300 is the Standard Deduction.  That rule is not specific to scholarships.  If anybody has less than a TOTAL of $6300 of ANY type of income (except self employment earning or unearned income such as interest, dividends, and capital gains), they usually do not need to file a tax return.  For purposes of the Standard Deduction, scholarships are considered as "earned" income.
<a rel="nofollow" target="_blank" href="https://www.irs.gov/publications/p17/ch20.html#en_US_2015_publink1000173023">https://www.irs.gov/pub...>
<a rel="nofollow" target="_blank" href="https://www.irs.gov/publications/p501/ar02.html#en_US_2015_publink1000220702">https://www.irs.gov/pu...>

[mikaelataxes]

Ahh- ok- thank-you for the explanation

[taxpayer60056]

ROTC scholarships whether they are used for tuition, fees, books OR room and board are not taxable.   These "scholarships" are not scholarships under 26 USC 117.   26 CFR 1.117-4(b) specifically removes them from Section 117.   They are exempt from gross income under 26 USC 134 as qualified military allowances.  Publication 970 deals with Section 117 exempt scholarships, and not Section 134.   A better publication for reference is the Armed Forces Tax Guide, Publication3.

[cinayw]

Has anyone verified this?  The notion that ROTC scholarships have been removed as the taxable income?  I too am trying to determine if monies provided to ROTC scholarship recipients by my son's university for room & board are taxable or not.

There seems to be 2 different issues here:
a) are ROTC scholarships taxable (in the event that the amount is more than tuition and qualified expenses)

b) if room and board monies are offered by the university for said ROTC scholarship winners, is that taxable? (I think it's pretty clear that room & board is not a qualified education expense but does the fact that ROTC scholarhips aren't taxable [if that is true] affect this?