My daughter is a full time student as has a job as a resident assistant at her university, where they "give" her room and board in exchange for her time spent on her job. She is required to work so many hours a week, as well as weekends, as well as time spent in training and planning and implementing resident programs. All this to say she is "actively" earning this income. She is required to live in the dorm and eat so many of her meals during the week on campus, as well as have so many interactions with her residents per semester. The university has issued her a 1098-t which in box one shows an amount billed for tuition and fees and in box 5 shows the amount of her room and board as well as two academic scholarships she was awarded. In addition to this she has a student loan to cover the remainder of her tuition and fees.
After putting the 1098-t into TT I have come to the conclusion, that regardless of the fact that she is required to live in the dorm for the position, the value of the amount for room and board is considered taxable income to her because of the way the university is reporting it. TT has included the value of room and board and added it to her W-2 from her other campus job, but it also added the value of her scholarship for room and board and deemed it "unearned income" (as stated above, this could not be further from the truth) and has included it on form 8615 where it is now asking for my taxable income so it can be taxed at a higher rate.
Is this all correct? The school will not give any information on why they consider it scholarship income vs W-2 income, even though they are employees of the university. I'm not sure why the income would be taxable since her living in the dorm is a condition of employment. I cannot find any publication which SPECIFICALLY speaks to this type of situation... the fact that it is a STUDENT and the job requirement of living and eating on the employers location for the benefit of the employer. This is more like an employee living on a cruise ship to do the job, rather than a professor who can live where they want but gets housing paid for.
Any suggestions where I can find the exact directions for this would be appreciated.
