college scholorships and income tax liability.

Discussion in 'Countryside Families' started by manfred, Jan 11, 2018.

  1. manfred

    manfred Well-Known Member

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    Anyone here delt with this? My grandson got scholorships and grants and I'm seeing on tax forms that some of it is taxable.
    Will they send a 1099?
     
  2. Jlynnp

    Jlynnp Well-Known Member

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    Yes they will.
     

  3. Lisa in WA

    Lisa in WA Formerly LisainN.Idaho Supporter

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    And isnt this wonderful? Almost like the government doesn't want kids to go to college.
     
  4. Yvonne's hubby

    Yvonne's hubby Murphy was an optimist ;) Staff Member

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    There is a reason it's called "income tax". They want their fair share from everyone. :rolleyes:
     
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  5. farmrbrown

    farmrbrown nobody

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    Correction.
    They want it whether it's a fair share or not!
    One of the biggest mistakes we ever made. :mad:
     
  6. AmericanStand

    AmericanStand Well-Known Member

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    I agree Farmer Brown the idea of an income tax is horrible.
    There was some justice in the old income tax rates that Rose to 90% but the wealthy have paid off our representatives and that’s no longer in existence.
    The only reasonable tax is the dynasty tax a 100% tax when you die and then forcing the various governments to live within that income. Again something I know is not likely to happen.
     
  7. Yvonne's hubby

    Yvonne's hubby Murphy was an optimist ;) Staff Member

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    So what little I have accumulated with my frugal lifestyle, years of hard work should just be handed to the government upon my demise? My Yvonne forced out of our home that she has worked towards? Kids denied the chance of building upon what I started? Naw I don't care much for that option at all.
     
  8. Danaus29

    Danaus29 Well-Known Member Supporter

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    The part that is used to pay for tuition and required supplies is non taxable. Any part that is used for incidentals such as food, gas, bus fare, rooming, etc is taxable.
    Read the IRS rules here:
    https://www.irs.gov/taxtopics/tc421
    It gets complicated too. Any taxable portion is reported under the wages category. If the grant recipient is filing under their own return and not as a dependent, their total income is considered. If their income is low enough the portion used for incidentals may still be non taxable.
     
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  9. Lisa in WA

    Lisa in WA Formerly LisainN.Idaho Supporter

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    Scholarships usually only cover tuition, books and expenses dedicated to education and those shouldn’t be taxed. Living expenses are generally funded by student loans
     
  10. Danaus29

    Danaus29 Well-Known Member Supporter

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    Grants can be used to pay for anything necessary for college, within reasonable limits. Room and board are necessary. Grant money used for that is taxable if the recipient had enough income to be taxed.

    Loans are not taxable income and were not part of the ops question.
     
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  11. royB

    royB Well-Known Member

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    depending on your tax situation, you may actually benefit from some or all of it being taxed as income. You get tax credit for education expenses and you also get the college tax credit. I looked into it not too long ago and there was a great example of how some people get more back by claiming it as income instead of using it for the expenses directly, then claiming all the expenses and tax credits.