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Get your taxes done using TurboTax
Q. Surely if the scholarship includes room & board, that part is support.?
A. Yes and no. Yes, the room and board are support. But the scholarship is not funds provided by the student. They're third party support. So, it's nearly impossible that the student provided more than half his own support. It's also possible that the parent didn't provide more than half the student's support, either. But that doesn't matter under the qualifying child rules.
The support test is different for each type of dependent. The support test, for a Qualifying Child, is only that the child didn't provide more than half his own support. The support test for a Qualifying Relative is that the taxpayer provided more than half the relative's support. The rules were written this way to allow the parents of students on scholarship to be able to continue to claim them as dependents.