@Kayak24, some schools require an additional step with regard to financial aid. https://idoc.collegeboard.org/idoc/
It’s a pain. I have to do it for a few of D’s schools. For us, the deadline isn’t until mid-December for that, but the CSS profile is due 11/15 so you may have additional time to get that done.
Re “lasts” these are hard. I am having a hard time right now because my S is deciding not to do his winter sport (not officially yet, but I’m expecting it.) I didn’t realize that his “last” competition had already happened and that makes me really sad.
Also annoyed BTW, because he is just being lazy. We told him last night that if he isn’t going to do the sport, he has to get a job. He wasn’t too pleased.
@3scoutsmom Thank you for mentioning this. D is applying for a local scholarship, and I hadn’t considered the fact that it may matter tax-wise how we use that money, should D get it. There may be other sticky points here specific to our situation if D ends up in Canada. Hmmmm I should probably read the fine print to make sure D could use the scholarship money if she goes international. She can’t with NMF.
I know you guys are right about taxes on scholarships. It just seems so wrong to me. So you have some charity, like the Rotary Club, fundraise to create a scholarship. Then, depending on the parents income and federal, state and local tax rate, less than half of the money that you raised might go to this kid, with the rest to various governments? If I were a member of that donating club, I’d be pretty upset.
Our DD’18’s high school has an annual parents’ dinner that we attend every year. Her sister went to the same school, so tonight will be our 8th and our last. Next Saturday is our last cross country meet . . . another of a long list of lasts. (I won’t miss trying to find parking in that school parking lot, though!)
Right, @melvin123. With all of the hoops D is having to jump through for this minimal scholarship, not to mention the recommenders who are taking the time to write letters for her, I’m starting to wonder if it’s worth it. I think it’s pretty much done, though, and D is excited about the honor and recognition that goes along with the scholarship. This may be the learning curve…depending on how this shakes out, we may discourage our other kids from applying in the future.
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@melvin1233 that’s exactly why some orgaizations, like my husband’s employer put restristions on the scholarships and state they can only be used for books and tuition which is not taxed.
Yes, I’ve noticed many of these say “tuition only,” which is good.
Like previously stated, not all of the scholarship is being taxed. Just the part not covering tuition, fees, or books.
And even then there is a standard deduction that applies.
My D did not have a full ride but the amount of tax she had to pay was very small compared to the scholarship.
I am not saying no to scholarships or grants because I might have to pay a fraction of it as tax.
There’s a great discussion about outside scholarships here:
It’s kind of a double edged sword for kid’s looking with help on the $10K+ room and board. I’ve noitced the the smaller scholarship don’t seem to have the tutition only restriction. On the bright side the kids only end up owing taxes if they get a lot of taxable scholarship money.
We’ve agreed to pay any federal taxes our kids owe due to scholarships. For D16 taxes on scholarships ended up being around $500 for federal taxes and $20ish for state taxes. This year it will be a little more because because last year taxes were only for one semester, this year she’ll have two semesters and but not as many small one time scholarships.
This whole scholarship discussion reminds me of a mess that happened when my husband and I got married. He was in medical school at USC (expensive, as we all know) and if I got a job there he got 1/2 tuition benefit. So, clearly a no brainer to do that. However, how they worked it was they added the tuition benefit to my salary THEN taxed me on that amount. So I was taxed on a significant amount of money I never saw. It was still worth it, but that was a huge hit to my monthly take home.
So for those in the taxable scholarship situation, do your kids file tax returns or is their taxable scholarship income added to your tax return? I’ve been wondering about that, since with S likely to get a nearly full ride I don’t know if he’ll still be considered our dependent or if he would be independent for IRS purposes. Soon I’ll have to research this on the IRS site and financial forums, just curious about the experience of parents here who have been down the same road.
Edit to add: wow, that was easy. Here’s a link to a site that answered almost all my questions!
https://ttlc.intuit.com/questions/2671609-can-i-claim-a-college-student-as-a-dependent-if-he-is-away-all-year
DH helped DD do her tax with Turbo Tax, he had to do our taxes first because she had to put info from our taxes on her tax form. That’s how she got her taxable scholarships taxed at our rate. DH checked the very confusing tax rules and said the program handled to scholarship taxes correctly.
It’s important to keep good records on where the scholarship money is spent remember that scholarship money used for text books is not taxed. DD has a folder where she keep all her text book receipts.
I had no idea that Forbes had financial rankings for institutions. I will be checking out that list.
As far as local scholarships go, we will decide on a case-by-case basis depending on the scholarship amount, the essay requirements, and recommendations requirement. I will say that some of them seem to have very standard essays that can probably be re-purposed with a little tweaking.
Good news here – DS got his acceptance to Clemson in the mail yesterday! I wasn’t expecting to hear from them so soon. Last night I went in his room and low and behold he was working on his Calhoun Honors College essays!! Yes, those same essay prompts that he printed out back in August and hasn’t touched since. Honors College app is due 12/1 and he has 3 essays to write so we will see if he gets it done.
@traveler98 the kids will report taxable scholarships on their own tax return, even if they are still your dependent on taxes.
Scholarships cannot be used to figure who provides more support, so if your child is a full time college student under 24, most likely they will qualify to be your dependent for taxes.
Turbotax has the freedom edition that offers free online efile of federal (and I think state return), if income is under $30k I believe.
Scholarships: not quite sure how to word this…
Let’s say a student gets $11,000 in outside scholarships which can be used to offset the student’s required work contribution (let’s say $5,000) and then maybe $1,000 can be used to buy a computer (if the school allows that).
So, that leaves $5,000 that will reduce the amount of grant money provided by the college. But, is that $5,000 still taxable income to the student? If so, is it better to just decline $5,000 of the outside scholarships?
Added to above
Wouldn’t that $5,000 that’s just reducing the grant money (if it does count as income) possibly increase the FAFSA EFC and the CSS profile in some way?