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FAFSA Help: Putting in scholarships, grants, etc. on FAFSA

Azure326Azure326 Posts: 1,179Registered User Senior Member
On the FAFSA there's an entry field that seems rather vague. It says to put in scholarships and other stuff reported to the IRS, but I don't know exactly what to put in here as I haven't reported anything to the IRS. I am classified as a dependent and will not file my taxes. Am I basically supposed to put in the field the sum total of ALL of my scholarships, cal grants, pell grants, etc. in there? Also, if my college sends electronic fund transfers (EFT Refunds from scholarship aid; basically everything that is left over from the aid is deposited into my account, it was ~$1100 for Fall 2007 Semester), where do I put this information (which box?)? If I already submitted my FAFSA, would it be perfectly fine if I added this information on the correction (I submitted it first and then realized that I wasn't supposed to leave the field blank)?

In the mail I received a letter from UC Berkeley stating "Information for Determining Federal Tax Benefits for Higher Education Expenses." On the paper it said:

"Tax year 2007 Amounts"
Part 1: Payments Received for Tuition and Related Expenses:
University Registration Fees $393
Educational Fees $2925
Regular Session Fees $205.75
Qualified Expenses Total for Jan 1 - Dec. 31, 2007: $3523.75

Part 2: Scholarships or Grants:
Grants and Scholarships: $8913
Total for Jan 1 - Dec 31, 2007

Am I supposed to put this information somewhere on the FAFSA if I am a dependent?
Post edited by Azure326 on
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Replies to: FAFSA Help: Putting in scholarships, grants, etc. on FAFSA

  • swimcatsmomswimcatsmom Posts: 15,029Registered User Senior Member
    Any scholarships/grants in excess of tuition/fees/required books are taxable and have to be reported on a tax return as income. Looking at your numbers you may be required to do a tax return especially if you have any other income (you are certainly close to the income cut off but I can't remember exactly what it is). You can still do a tax return even if you are claimed as a dependent by your parents. You would get a standardized deduction but not the personal exemption. IRS form 970 gives you the rules about what part of a scholarship is taxable.

    http://www.irs.gov/pub/irs-pdf/p970.pdf
    pages 4-6

    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.

    You do not have to show the refunded amount seperately - it is the total scholarships/grants less tuition/fees/books that must be reported on taxes and FAFSA.

    Rules for when a dependent must file a tax return are in IRS publication 929

    http://www.irs.gov/pub/irs-pdf/p929.pdf
  • Azure326Azure326 Posts: 1,179Registered User Senior Member
    The scholarships/grants in excess of tuition/fees/required books, if I'm understanding you correctly, would be the EFT Refund, right (Which was about ~1100 lass semester)? So, I have to report this somewhere on the FAFSA? Where?

    What's this AGI form (I don't recall seeing such a thing when filling out the FAFSA)? I don't have a tax return, so I'm a little confused.
  • swimcatsmomswimcatsmom Posts: 15,029Registered User Senior Member
    I don't have a tax return, so I'm a little confused.
    The point is you may have to do a tax return. If your earned income is $5350 or over you have to do a tax return even if you are claimed as a dependent.Taxable scholarships/grants are considered earned income for tax purposes.
    The scholarships/grants in excess of tuition/fees/required books, if I'm understanding you correctly, would be the EFT Refund, right (Which was about ~1100 lass semester)?

    No it is not the refund. Other items are charged to your bursar account such as room and board. Scholarship/grant money used to pay for room and board is taxable.

    From the numbers you showed on your original post:
    Qualified Expenses Total for Jan 1 - Dec. 31, 2007: $3523.75
    Grants and Scholarships: $8913

    Your scholarships/grants totaled $8913 - your qualified expenses were $3523.75. The difference between the two is the taxable part of your scholarships and grants.
    8913-3523.75 = $5389.


    Nothing to do with the refunded $$s.

    Read the publication I gave the link for.
  • sblake7sblake7 Posts: 1,691Registered User Senior Member
    swimcatsmom explained it well-- reread her post.

    Bottom lines:

    1. $8913 - $3523 = $5390 taxable income from the Grant/scholarship funds.

    2. You're probably required to file a tax return-- check the IRS site.

    3. Regardless of whether you're required to file, the $5930 gets reported on FAFSA (along with any other income) as part of your Adjusted Gross Income. Then you also report the $5930 on one of the Worksheets, and the formula subtracts if from your AGI so that it won't adversely affect your financial aid next year.

    4. "EFT Refund" isn't a phrase that's used by FAFSA or by the IRS-- so don't put that figure anywhere.
  • sblake7sblake7 Posts: 1,691Registered User Senior Member
    (sorry-- posted while scm was re-explaining)
  • swimcatsmomswimcatsmom Posts: 15,029Registered User Senior Member
    Books required for class can be used to reduce the taxable portion of scholarships/grants so you may squeak in under the $5350 limit if you have no other earned or unearned income. If you have any other income you may have to do a tax return.
  • Azure326Azure326 Posts: 1,179Registered User Senior Member
    Thanks for the clarifications.

    I don't have any other income. How would I "use" books to reduce the taxable portion of scholarships/grants (where would I put in how much I've spent on books on the FAFSA?)? I've spent more than $40 on books, so I shouldn't have to file a tax return, correct?
  • swimcatsmomswimcatsmom Posts: 15,029Registered User Senior Member
    You need to use the worksheet on IRS 970 to calculate whether you have taxable scholarships/grants.

    http://www.irs.gov/pub/irs-pdf/p970.pdf

    page 5. Keep that in your records somewhere along with the 1098-t (the form you got from your school) so if the taxman ever asks you have a record of why you did not have to report it. Attach copies of receipts for books.
  • swimcatsmomswimcatsmom Posts: 15,029Registered User Senior Member
    Oh and you need to talk to our parents and make sure they are not using your tuition/fees to claim any sort of tax credit (hope tax credit/tuition & fees deduction etc). The tuition/fees can only be used as a 'qualifying cost' once. That is you can use it to reduce your taxable scholarships/grants or they can use it for a tax credit - not both.
  • Azure326Azure326 Posts: 1,179Registered User Senior Member
    Thanks for the help. I was just wondering where do I put this information (which boxes?)? I see a box for AGI:

    35. What was your (and your spouse's) adjusted gross income for 2007?

    But where would I put the $5390 on the FAFSA and where would I put the deductions from buying books (I have the receipts that would put the $5390 below the $5350 limit). Where would I put the information I mentioned in the above posts/the cost of books; would I put it in any of the following fields:

    WB12. Money received, or paid on the student's behalf (e.g., bills), not reported elsewhere on this form.

    WC4. Student grant and scholarship aid reported to the IRS as part of your (and your spouse's) adjusted gross income. Includes AmeriCorps benefits (awards, living allowances, and interest accrual payments), as well as grant or scholarship portions of fellowships and assistantships.

    So, for AGI I put 8913? Where would I put the 3523, and the cost of books to put the $5390 below the limit? What about WB12 (Would the cost of the dorm and stuff go in there?)?

    I'm just a little confused as what the $5390 will end up representing to the FAFSA people (It's not like I had this money pocketed or put in my bank account; it all went to paying for dorm costs/books). I currently have all 3 of the above fields blank/set to 0. I'm guessing I put 8913 for AGI and WC4, but where do I put the $3523 and the cost of the books? I was wondering which field in the worksheet was referred to here:

    3. Regardless of whether you're required to file, the $5930 gets reported on FAFSA (along with any other income) as part of your Adjusted Gross Income. Then you also report the $5930 on one of the Worksheets, and the formula subtracts if from your AGI so that it won't adversely affect your financial aid next year.


    I apologize for all the questions and I really appreciate your taking the time to help me.
  • sblake7sblake7 Posts: 1,691Registered User Senior Member
    Put the $5930 in the student's worksheet C, question #42, under Student grants and other awards. "Report any student grant and scholarship aid reported to the IRS in your AGI."
  • swimcatsmomswimcatsmom Posts: 15,029Registered User Senior Member
    sblake - I am not sure he puts it anywhere. He is not doing a tax return so has no AGI. If there is no AGI then no scholarship/grant is reported to the IRS so it should not be shown on the worksheet.

    My daughter does a tax return so I know how it works when you have a tax return. I don't think you report it at all if it is not taxable.

    The worksheet for reporting untaxed income specifically says not to report untaxed financial aid.
  • sblake7sblake7 Posts: 1,691Registered User Senior Member
    scm:

    Doesn't matter if he's filing taxes or not. The $5930 is taxable income, so it gets included in Q35 as part of his AGI (FAFSA requires him to calculate as if he were filing taxes, using IRS guidelines and instructions). Then it gets deducted out in Worksheet C.

    Works out the same either way, I suppose, unless there's a 20K or 50K threshold involved for SNT or Auto Zero EFC.
  • Azure326Azure326 Posts: 1,179Registered User Senior Member
    sblake7 - So I should put $5390 under WC4 that I listed in my previous post? What should I put for my AGI then? These are all supposed to cancel out and not effect my EFC in the end, right?
  • sblake7sblake7 Posts: 1,691Registered User Senior Member
    Azure-

    Yeah, they cancel out. So if you add the $5390 to whatever other income you have to get your AGI (Q35), be sure to list the $5390 on Worksheet C, so the formula will take it away from your AGI before it calculates your EFC. I think that's the correct way to do it, whether you're required to file taxes or not.

    The thinking is that a student shouldn't be penalized aid-wise next year for this years financial aid grants.

    On the other hand, if you don't include it in your AGI (Q35), don't include it on Worksheet C. I think that's what swimcatsmom is suggesting. It should work out to the same EFC either way.
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