As the scholarship is given to the student, any scholarship in excess of tuition is taxable to the student who has to report it on his own tax return.
In your case, as the excess is only $1,200 and your child has no other income, he is not required to file a tax return.
If your dependent son is under age 19 (or under 24 and a full-time student), he must file a tax return for 2024 if he had any of the following:
- Total income (wages, salaries, taxable scholarship etc.) of more than $14,600 in 2024.
- Unearned income (interest, dividends, capital gains) of more than $1,300.
- Gross income (earned plus unearned) exceeding the larger of $1,300 or his earned income (up to $14,600) plus $400.
- Other self-employment income over $400, including box 1 of a 1099-NEC
If your son is eligible for education credits such as the AOTC or the Lifetime Learning Credit and your income allows it, you can also use part of his tuition to claim an education credit on your tax return, leaving your son a greater taxable excess scholarship.
For the AOTC, you need to use $4,000 of tuition to get the maximum credit of $2,500.
For the LLC, you need to use $10,000 of tuition to claim the maximum credit of $2,000.
In either, the excess scholarship for your son would be less than $14,600, which does not require him to file a tax return.
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