<p>^ Grants and scholarships that exceed qualified expenses (per the 1098-T) are subject to income taxes - but only the amount that exceeds the qualified expenses is taxed.</p>
<p>I am not sure where you would put the excess scholarship and grant amounts - as I said, we are California residents, so in our case they go on daughter’s Federal return and then on the California state return in the same amount. With the explanation moss gave, it would seem they would go on your son’s California return.</p>