The information below will help you confirm if the $8,600 must be taxable income to your college student. If so, then adding the excess of scholarships to that would require that a tax return should be filed for the student. Use the information below to help clarify your next step.
You may be able to increase the combined value of an education credit and certain educational assistance if the student includes some or all of the educational assistance in income in the year it is received.
A scholarship or fellowship grant is tax free only to the extent:
- • It doesn't exceed your qualified education expenses;
- • It isn't designated or earmarked for other purposes (such as room and board), and doesn't require (by its terms) that it can't be used for qualified education expenses; and
- • It doesn't represent payment for teaching, research, or other services required as a condition for receiving the scholarship.
If and to the extent your scholarship or fellowship grant doesn't meet the requirements described earlier, it is taxable and must be included in gross income. See IRS Publication 970 for greater detail.
There is a detailed explanation that will reflect your specific situation at this link from @Carl.
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