Terry D EA Posted March 24, 2019 Report Share Posted March 24, 2019 A student receives scholarship funds that are in excess of the amounts the college charged by a few hundred dollars. As a freshman, this university requires the student to live on campus. With that said, would the scholarship funds used for room and board be tax free? I have done some research and cannot find a definitive answer. In this scenario, the student is not required to file a return and the only reason we are attempting to file is to retrieve a refund. Thoughts please. Quote Link to comment Share on other sites More sharing options...
Terry D EA Posted March 25, 2019 Author Report Share Posted March 25, 2019 Looking at Pub 970, it makes reference to "fees" required by the university are tax free. I have asked the client to contact the school to get a breakdown of the charges. I did find that if there is no filing requirement, then this is a moot issue. It very well may be worth giving up a couple hundred bucks. Quote Link to comment Share on other sites More sharing options...
Lion EA Posted March 25, 2019 Report Share Posted March 25, 2019 Read the terms of the scholarship. If it is for tuition only, then any excess is taxable. If it can be used for room & board also, them perhaps the student has no excess to tax. If it is taxable, the student might have a filing requirement. Quote Link to comment Share on other sites More sharing options...
Pacun Posted March 25, 2019 Report Share Posted March 25, 2019 If taxable or if you want to make it taxable, then AOC is in order. Quote Link to comment Share on other sites More sharing options...
Terry D EA Posted March 25, 2019 Author Report Share Posted March 25, 2019 No the AOC is not in order. The scholarship received was more than the college received as payment so no education credit. I have read many articles and Pub 970 to see if the excess scholarship would cause a student to have a filing requirement and have not found anything that says so. Quote Link to comment Share on other sites More sharing options...
Hahn1040 Posted March 25, 2019 Report Share Posted March 25, 2019 Pub 970 page 5-6 A scholarship or fellowship grant is tax free only to the extent:•It doesn't exceed your qualified education expenses;•It isn't designated or earmarked for other purposes (such as room and board), and doesn't require (by its terms) that it can't be used for qualified education expenses; and•It doesn't represent payment for teaching, research, or other services required as a condition for receiving the scholarship. Expenses that don't qualify.Qualified education expenses don't include the cost of:•Room and board,•Travel,•Research,•Clerical help, or•Equipment and other expenses that aren't required for enrollment in or attendance at an eligible educational institution. Quote Link to comment Share on other sites More sharing options...
Terry D EA Posted March 26, 2019 Author Report Share Posted March 26, 2019 Thanks but I got that and have read that numerous times. I have a call in to the client to try to find out the terms of the scholarship. The part that throws me in this scenario is the scholarship does exceed the expenses according to the 1098-T, but if the student did not receive any of the remainder to be used on anything, then how is that taxable. I'm not trying to be thick headed here I just want to understand better. I have had clients who have received a pell grant that took the remaining funds and spent them on non-educational items so yes, those funds were taxable. Quote Link to comment Share on other sites More sharing options...
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