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Taxable Scholarship Income

OVO1994OVO1994 Posts: 5Registered User New Member
I am filling out the FAFSA now and i have about $8500 in grants+scholarships where around $5000 is tuition/school related (not including housing). This aid is all for the fall quarter. So I have about $3500 in taxable income, but since its under $5700 (or whatever the threshold is) I know I don't have to file a tax return...but do I have to report the $3500 on the FAFSA somewhere?

Also I am confused because the 1098t form I received only lists the aid I received fall quarter even though box 7 is checked (box that saids academic period from Jan - March 2013 is included). Is the winter quarter aid not listed because the form follows the calendar year rather than the school year?

Thank you!
Post edited by OVO1994 on

Replies to: Taxable Scholarship Income

  • 4kidsdad4kidsdad Posts: 2,976Registered User Senior Member
    See IRS Pub 970
    If your only income is a completely tax-free scholarship or fellowship, you do not have to file a tax return and no reporting is necessary. If all or part of your scholarship or fellowship is taxable and you are required to file a tax return, report the taxable amount as explained below...
    You should file your tax returns.
    Is the winter quarter aid not listed because the form follows the calendar year rather than the school year?
    1098-T and your tax returns follow calender year.
  • OVO1994OVO1994 Posts: 5Registered User New Member
    Thank you for the quick reply!

    "Whether you must report your scholarship or fellowship depends on whether you must file a return and whether any part of your scholarship or fellowship is taxable."

    I'm a little unclear on the "whether you must file a return" part. I thought there was an income threshold for a dependent student where if your income is lower than that threshold than you don't have to file?
  • 4kidsdad4kidsdad Posts: 2,976Registered User Senior Member
    You should always file your tax returns. The state return often has a lower threshold than the federal return.
    but do I have to report the $3500 on the FAFSA somewhere?
    See http://talk.collegeconfidential.com/financial-aid-scholarships/468671-fafsa-help-putting-scholarships-grants-etc-fafsa.html
    swmcatsmom wrote:
    On FAFSA the taxable portion of scholarships/grants is included in your AGI from your tax return. You show the amount included on the worksheet so that it will be deducted from your AGI so as not to negatively affect your financial aid. ie the FAFSA formula will exclude the taxable scholarships when calculating your EFC.
  • OVO1994OVO1994 Posts: 5Registered User New Member
    Thanks. I have one more question: I qualify for the simplified needs test and I am given the option of skipping the income and assets questions on FAFSA. Is it wise to skip the questions since I won't have to report the scholarships/grants?
  • OVO1994OVO1994 Posts: 5Registered User New Member
    4kidsdad, according to IRS Pub 929 I don't have to file a tax return since my earned income is below $5950. Is there any benefit to filing? I don't have anything that could get refunded...
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