My 21 y/o daughter, who I claim as a dependent, received about $6200 in scholarships; her tuition was about $14000. She lives off-campus and the scholarship is sent directly to the school, so I know it could only have been used to pay for tuition and all the other required fees the school charges. Almost $2000 of this scholarship was sent in December 2023 but earmarked for the spring (2024) tuition, and I marked it as such in TT. TT says she needs to claim the remaining $4000 as income. If I say all of the money was for 2023 tuition, it says she needs to claim the entire scholarship amount as income. How can this be possible? Like I said, every penny was used towards tuition, not room or board. I was asked to repost this question with the following info:
- Are you the student or parent. Parent
- Is the student the parent's dependent. Yes, she is my dependent
- Box 1 of the 1098-T- $14842.12
- box 5 of the 1098-T- $6323.00
- Any other scholarships not shown in box 5 - No monies in any other boxes
- Does box 5 include any of the 529/ESA plan payments (it should not)- No
- Is any of the Scholarship restricted; i.e. it must be used for tuition- Not that I am aware, it was only used for tuition in any case.
- Box 1 of the 1099-Q- $7716.99
- Box 2 of the 1099-Q- $2627.55
- Who’s name and SS# are on the 1099-Q, parent or student (who’s the “recipient”)? -Me, the parent
- Room/rent & board/food paid. If student lives off campus, what is school's R&B on campus charge (you can claim the lesser of the two) -$6090 off campus. I use my personal funds to pay her rent in the summer. When she lived in the dorms, room and board was about $14500 per year.
- Other qualified expenses not included in box 1 of the 1098-T, e.g. books & computers - $195.24 ebooks
- How much taxable income does the student have, from what sources- On campus PT job and interest added up to $6239.32 in 2023
- How much of the AOTC are you eligible for?- I've claimed for 2 prior years at the full amount, didn't qualify at all last year, this year we qualify for $1800 of the possible $2500.
- Is the student an undergrad or grad student? - Undergrad
- Is the student a degree candidate attending school half time or more? - She's a full time student working towards her first bachelor's degree.
What I don't get is how the scholarship can be taxable, even if the full amount of the scholarship was being used towards 2023 expenses. The scholarship $6323 plus the full $7717 dispersment of the 529 add up to less than the full amount of the tuition.
