My daughter paid full tuition out of her own pocket during the Spring 2016 semester. She then received a scholarship during the Fall 2016 semester that fully paid her tuition for the Fall semester and also gave her a monthly stipend for living expenses. Now I know that the stipend is taxable if she doesn’t have any other qualified expenses. However, since the Spring tuition is a qualified expense and is more than the total of her stipends, can she claim on her 2016 tax return that the full amount of her scholarship was used to pay for qualified expenses even though she received the scholarship after the Spring tuition was paid?
YES.
the IRS does not care which semester of 2016 a scholarship was received.
They care ONLY about the entire 2016 tax year.
But if the stipend was specifically for living expenses, can it be allocated to tuition?
What if she reported the stipend as taxable income and claimed the tuition that wasn’t covered by scholarship for an education credit?
Is she independent for tax purposes?
She should check to see what the 1099 2016 statement sent from the college shows.
If it lists only the total amount she received [which covered tuition and the stipend] during the Fall semester, then I see no reason she cant declare that entire amount as qualified expenses fro the full calender year.
If it is broken out into tuition and “other”, then that may make a difference as to what she can declare.
The stipend wasn’t specifically labeled for living expenses, and the 1098T shows a total amount in box 5. So I think she can claim the entire scholarship for qualified expenses. Thanks for your comments and advice!