Correct. It does not matter if you received a refund of the money or not. it sounds like this was a scholarship that had an intended use and could only be used for what it was meant for, which in this case was room and board. Since you received scholarship money and it was used for anything other than qualified education expenses, it becomes taxable income. The fact that it WAS used to cover those non-qualified expenses is all that matters to make it taxable. It does not matter that the school paid the expenses directly and you never actually touched the money.
And yes, since you have income from working, if your employer did not withhold taxes from your wages (which they likely did not due to it being below your standard deduction of $14,600) this will likely cause you to owe taxes on the scholarship money that was used to pay expenses other than qualified education expenses.
How old are you? Are you still claimed as a dependent on your parents return? If not, it is possible that you would be able to claim the American Opportunity Tax Credit to offset some of the taxes that are owed due to the scholarship since you also worked to pay for the rest of your tuition. If you used the $11,000 you earned from work to pay for tuition, this could count towards the AOTC. This credit is worth up to $2,500. If your parents claim you as a dependent on their tax return, you would not be able to claim this credit.
"Who can claim an education credit?
There are additional rules for each credit, but you must meet all three of the following for both:
- You, your dependent or a third party pays qualified education expenses for higher education.
- An eligible student must be enrolled at an eligible educational institution.
- The eligible student is yourself, your spouse or a dependent you list on your tax return.
Who cannot claim an education credit?
You cannot claim an education credit when:
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