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filing taxes for scholarships and other income

ihasaquestionihasaquestion Posts: 1Registered User New Member
edited December 2012 in Financial Aid & Scholarships
I'm a full time student and my parents put me down as a dependent. This year I will have earned $5000 in scholarships from my college and about $1100 from another scholarship. I am also working for the summer and will earn about $1500 (I'm not sure if you're supposed to include your income before taxes like SS and Medicaid or not. Are you?) Would I have to file for taxes? If yes, would it be better if my parents claim my income, or if I file my own taxes?


THANKSSS!
Post edited by ihasaquestion on

Replies to: filing taxes for scholarships and other income

  • atomomatomom Posts: 3,607Registered User Senior Member
    Minimum gross income (that's before they take out any taxes) for filing taxes is $9,500 for a single person under 65 for 2011 so it looks like you don't need to file. I'm not a tax expert, but it looks like it is better if your parents still claim you as a dependent. They wouldn't claim your income.
  • swimcatsmomswimcatsmom Posts: 15,053Registered User Senior Member
    Minimum gross income (that's before they take out any taxes) for filing taxes is $9,500 for a single person under 65 for 2011 so it looks like you don't need to file. I'm not a tax expert, but it looks like it is better if your parents still claim you as a dependent. They wouldn't claim your income.

    This is not accurate for an individual who can still be claimed as a dependent on someone else's taxes. Most students under the age of 24 are still their parents' dependents for tax purposes (there are exceptions). This reduces the income cut off for filing taxes for the individual.

    Basically, the $9500 consists of 2 parts - a standard deduction of $5800 and the personal exemption of $3700. When an individual is claimed as a dependent by someone else, the individual can not claim the personal exemption - the person claiming them instead claims a dependent exemption for them. This means the individual's cut off for taxes is the standard deduction of $5800 (for 2011). (this is assuming there is no unearned income which might change the cut offs - taxable scholarships are considered earned income for this purpose).

    If you do exceed the income cut off, then you must file your own taxes and declare your income. In general, as a student under the age of 24, your parents still get to claim you as a dependent unless you provide more than 50% of your own support. (Scholarships do not count toward providing your own support). But you can still claim your own standard deduction of $5800 for 2011 ($5950 for 2012). Your cut off for having to file taxes would therefore be $5800 for 2011 ($5950 for 2012). However only scholarships that exceed qualified education expenses are taxable income. So if you have scholarships (and/or need based grants such as the pell) that total $6000 and your qualified education expenses are $4000, then only $2000 is taxable income. Qualified education expenses are basically tuition and fees and required books and supplies. Expenses such as room and board are not qualified education expenses.

    Also keep in mind that it is the scholarships/grants you receive in the tax year, not the school year, that must be reported for taxes. So if you receive $6,000 for the 2012-2013 school year , but $3,000 is disbursed in fall 2012 and the remaining $3,000 is disbursed in January 2013 - you would only report the amount disbursed in 2012 on your 2012 taxes.

    So rough and simplified summary:
    1. Income cut off for 2012 $5950 if the student is someone else's dependent (unless there is unearned income)
    2. You, the student, would declare the income on your own taxes - not on your parents.
    3. Only scholarships/grants that exceed qualified education expenses are taxable income.
    4. It is the scholarships/grants received in the tax year that you report, not those received in the school year. (so fall 2012 would be reported on 2012 taxes, spring and fall 2013 on 2013 taxes).
    5. If taxes have been deducted from your income earned in a job, you will want to file taxes even if your income does not exceed the cut off, in order to have the taxes refunded to you.

    This is a rough and simplified summary and is not meant as tax advice. make sure you get actual tax advice (or a good tax software) when it comes to doing your taxes.
  • atomomatomom Posts: 3,607Registered User Senior Member
    Thanks--it sounds like you are a tax expert!
  • alwayswonderingalwayswondering Posts: 11Registered User New Member
    Just came across this thread as I am begin to research what the tax implications for my college freshman.

    He has made a few hundred dollars from a campus job. He also took a distribution of $10,000 (all of which he paid towards tuition) from the 529 plan we had established for him.

    Does the $10,000 count as unearned income? Does this amount of total income require that he file taxes?

    Thanks in advance for any help.
  • annoyingdadannoyingdad Posts: 2,252Registered User Senior Member
    If the amount of the distributions taken in 2012 is less than the amounts paid for college expenses in 2012, then there is no income to be reported. For 529 distributions, tuition, mandatory fees, required books and supplies and room and board are qualified expenses. If he only has a few hundred income from jobs he is not required to file unless there are withholdings to recover.

    Did he receive scholarships and grants that exceed the amount of tuition, fees, mandatory books and supplies? If so, that excess would be taxable income to him. For this purpose room and board are not qualified expenses.
  • alwayswonderingalwayswondering Posts: 11Registered User New Member
    He did receive scholarships and grants which covered about half of the costs (tuition/room/board). We (parents) and his 529 covered the rest.

    So grateful for the speedy response, annoyingdad. Thanks.
  • 4kidsdad4kidsdad Posts: 3,123Registered User Senior Member
    See Publication 970 (2011), Tax Benefits for Education
    Tax Benefits for Education

    If you use scholarships/grants on Room & Board, the scholarships/grants become taxable.

    Have a discussion with a tax expert!
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