@Carl
Appreciate the thorough response. Essentially any excess is taxable, which I totally get. But in my instance the grant (which per the description in Turbo Tax was dedicated to a non-qualified expense) is LESS than the qualified expenses.
So my primary question/quandary is this:
- The Turbo Tax program is instructing me that the full $5,500 from Box 1 I can be deducted as qualified expenses on my tax return, and that my dependent is responsible for reporting the $5,000 from Box 5 as other income on their tax return a) IF they exceed education expenses (which it it doesn't) - OR - b) if the money was used to pay for non-qualified expenses (which it was, for housing).
- But the IRS is saying the Box 1 $5,500 qualified expenses are to be reduced by the Box 5 $5,000 housing grant (specifically described by Turbo Tax in this instance as an unqualified expense) on my own tax return, which contradicts Turbo Tax.
Hopefully that helps clarify the contradiction I'm looking to resolve.
Understanding it's difficult to comprehend all the details of a specific situation in a forum. I may just take the adventure into my local Tax Assistance Center since while the IRS support over the phone has been pleasant with acceptable hold times, each time I call I uncover yet another layer that spawns another set of questions/confusion/contradictions.
Thanks for your help!
