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Level 1
posted Apr 13, 2025 11:32:05 PM

College Students with substantial need-based scholarships need to file returns?

Our college students are dependents (18 and 20 years old), who have NEVER filed tax returns, but they now receive a lot of need based aid reported on 1098-T forms, and other W-2 income. So, I am trying to determine if they need to file this year. Their income is as follows:

  1. Younger student: W-2 income of $7,000 from summer job; 1098-T Box 1 (QTRE) of $4,129 and Box 5 (Grants) of $9,817. So does that mean about $5,700 possible taxable grants plus $7,000 income means total is about $12,700 and under the filing requirement of $14,600? Am I doing this right?
  2. Older student: W-2 income of $6,700 from summer job; 1098-T Box 1 (QTRE) of $12,000 and Box 5 (Grants) of $30,100. So does that mean about $18,100 possible taxable grants plus $6,700 income means total is about $24,800 and must file since well over $14,600?                  

I don't know if I am doing this right and would appreciate some advice about this!

THANKS!

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3 Replies
Expert Alumni
Apr 14, 2025 4:27:35 AM

Yes, you are correct.

 

For your younger dependent, although he is not required to file a tax return, he can file to get a refund of income taxes withheld on his W-2. Social security and Medicare taxes are not refundable.

 

Please note that they have to indicate on their returns that they can be claimed as a dependent by another taxpayer.

Level 1
Apr 14, 2025 12:29:45 PM

Thank you for your reply. 

This caught us by surprise, so we'll have to file an extension request (they are both away at school).

I assume the older one will owe some tax (she had nothing withheld at her job on the W-2). What's the best way (short of actually doing the whole return now) of figuring out an estimate of how much she'll owe and paying that by tomorrow with the extension? And can I e-file the extension request for her? I bought the desktop TurboTax with 5 federal e-files included - does that use up one of the e-files? 

Expert Alumni
Apr 14, 2025 4:44:06 PM

No, you can file extensions and multiple states. 

 

The federal is limited to 5 e-files to prevent people from illegally using TurboTax to file returns professionally for others. TurboTax doesn't have the forms required for tax professional filing.