Yes, you’re correct, the excess is taxable. It’s a common scenario, unfortunately, where
billing is in one year and scholarship payment in another.
According to IRS Publication 970, Tax
Benefits for Education,
“A scholarship or
fellowship grant is tax free only to the extent:
·
It doesn't
exceed your qualified education expenses;
·
It isn't
designated or earmarked for other purposes (such as room and board), and
doesn't require (by its terms) that it can't be used for qualified education
expenses; and
·
It doesn't
represent payment for teaching, research, or other services required as a
condition for receiving the scholarship.”
