Why sign in to the Community?

  • Submit a question
  • Check your notifications
Sign in to the Community or Sign in to TurboTax and start working on your taxes
New Member
posted Mar 14, 2020 2:38:51 PM

How do I know if my room and board was covered by scholarships/grants or by student loans?

0 2 2772
2 Replies
Expert Alumni
Mar 14, 2020 2:58:21 PM

You can use student loans for room and board, but you can only apply scholarships and grants if they SPECIFICALLY allow use for room/board/travel- you must contact the scholarship source to be sure.

Level 15
Mar 14, 2020 5:09:02 PM

Generally, scholarships are available to cover any and all college expenses. Unless the terms of the scholarships specifically say they must be used for tuition and fees, you are free to allocate you scholarships and loans, for tax purposes, any way you want.

 

This may allow you (or your parents, if you are their dependent) to claim a tax credit, that was not apparently available. That is, there is a tax “loophole” available. The student reports all his scholarship, up to the amount needed to claim the American opportunity credit, as income on his return. That way, the parents  (or himself, if he is not a dependent) can claim the tuition credit on their return. They can do this because that much tuition was no longer paid by "tax free" scholarship.  You cannot do this if the school’s billing statement specifically shows the scholarships being applied to tuition or if the conditions of the grant are that it be used to pay for qualified expenses.

Using an example: Student has $10,000 in box 5 of the 1098-T and $8000 in box 1. At first glance he/she has $2000 of taxable income and nobody can claim the American opportunity credit. But if she reports $6000 as income on her return, the parents can claim $4000 of qualified expenses on their return.