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Level 3
posted Mar 20, 2025 9:45:09 AM

Is 1099-MISC due to overpayment of tuition NOT due to scholarship or loan taxable?

My mother-in-law wrote a check to my daughter's college as a gift to help pay for her tuition. Because this resulted in an overpayment (between other funding sources including a small scholarship and a 529 payment), the college refunded the excess to my daughter and sent her a 1099-MISC. Does my daughter report this as ordinary income on her tax return? Can she offset the tax hit by designating it for room/board expenses (which she currently does not deduct at all)?

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1 Replies
Expert Alumni
Mar 20, 2025 11:11:07 AM

Yes and maybe. Yes, the 1099-MISC will be added to her tax return. Maybe it is income on her return or maybe it should be subtracted back out.

 

For the 529- that can go towards 529 for Room and Board rather than tuition. If you can maneuver the 529 to room and board with space left for the 1099-MiSC to actually go to tuition, then you could prove it was qualified tuition and subtract the income. Students living at home still qualify for room and board. They have to live and eat somewhere.