Form 1098-T

[Christian]

A client's dependent who is in college has received his 1098-T which shows his scholarship and grant payments handily exceed his tuition. Since the tuition is fully covered my question here is as follows. Is the amount exceeding the tuition reported as income on his parents return ? Clearly the college got him some extra funds for something. 

[Lion EA]

The amount exceeding tuition is ordinary income on the student's return.

[Randall]

I don't trust the Forms.  I think the tuition box is the amount of tuition charged.  But the scholarship amount could be for more than just tuition, that is, room and board.  You'll have to dig deeper.

[Lion EA]

What Randall said. Make sure you have the bursar's statement, so you can see what was paid and when, along with the tuition and the scholarship(s).

I've seen a couple schools include their statements right on the back or bottom of Form 1098-T, which is so very helpful. But most of the time, you need the student to login to their account and print out the CALENDAR year bursar's statement.

[TexTaxToo]

Since Room & Board is not a qualified expense, a scholarship for Room & Board is taxable to the student.  Any amount used for tuition and other qualified expenses is not taxable.

[Christian]

I did some further reading and with what was provided by members here am pretty well satisfied I understand the matter. However, on one of my queries room and board was treated as an expense which qualify as a tax free use of scholarship funds.

[Christian]

The parents advise the funds were paid for fees, books, and supplies so it's a moot point although I see Kiplinger a tax publication I subscribe to advises room and board do not qualify.

[Lion EA]

Room & Board does NOT qualify for the AOC, but it does qualify to make 529 Plan distributions non-taxable. Way too many details in all the different education benefits!!