Hello,
My son has the FL Prepay (grandfathered before 2007) for both tuition and local fees plans. He also received several other scholarships including Bright Futures, Vires, Pell grant, and FSU grants from the college. On his 1098T, it shows he received more in scholarships or grants (Box 5 - $9,799.15) than qualified tuition and related expenses (Box 1 -$2,010.17). The breakdown for the $2,010.17 comes from payments of $1,314.43 from FL Prepay Tuition, $451.49 from FL Prepay Local Fees, and only $244.25 from Pell Grant, totaling the $2010.17 that was received as payment. However his actual tuition was $3092.62. I don't understand why they didn't use this amount for Box 1 instead.
So the difference between Box 5 and Box 1 is $7,788.98, of which we also used $5,598 for dorm and meal plan. I assume my son has to claim this total now ($5,598) as income on his taxes since it was not "qualified education expenses". So my question for upcoming Fall 2023, since he will have enough in scholarships to pay for tuition expenses, am I better off just not even using the FL prepay at all to pay for tuition instead let the other scholarship pay for it since he will have all these scholarships, so he's not ending up being taxed more on scholarship money being excess, if I'm making sense? It just seems like out of that total of $9799.15 in scholarship, they only paid $244.25 from Pell Grant, and the rest was paid for with the FL Prepay Tuition and FL Prepay Local Fees plans. Just doesn't make sense to me. And since my son worked and earned $7,168, and now has to include the $5598 as income, there's something about kiddie tax, which my brain can't even process right now :( My brain is mushed :(
