Thank you very much for detailed answer. That is very helpful. So the reason why I am revisiting this questions is the application FAFSA that has a question 43d -Student college grant and scholarship aid reported to the IRS in your income. And I know for sure we did not include any additional income to W2 -not on parents. not on daughter's return.
From what you have provided above, here is the conclusion I came to. Please let me know if you think I misunderstood you and thinking wrong.
-From $3300 of leftovers of scholarship- taxable amount is only $2300 (3300-1000 in books and other supplies).
-Since my daughter made only a little over $4K on her W2 (from work) and she got tax refund, adding $2300 to the income will not make a difference in her tax liability and she will not owe any taxes any way; so we DO NOT need to amend her 2018 taxes.
-as far as FAFSA question- I think we should put an answer for that question as $2300. Even though this number doesn't show up on her tax return.
Please let me know if I'm thinking in a right direction.
