<p>Our son received a generous grant from his school based on their assesment of his need. How will that effect his tax situation and the next years award?</p>
<p>You’ll want to consult IRS Pub. 970. In general, student financial aid (excluding loans) which exceed the amount of tuition, fees, and required course supplies is reportable as income to the student. The school will send you a 1098-T in a few weeks but I’d suggest working the numbers out for yourself as they are notoriously inaccurate and don’t include the eligible out of pocket expenses.</p>
<p>You’ll also want to determine how the American Opportunity tax credit come into play on your return and whether it would make more sense to treat his grant as paying for non-qualified expenses (assuming it wasn’t designated specifically for tuition) and other contributions as paying for the qualified expenses. There are several threads from last year that discuss these topics, swimcatsmom seems to have a very good grasp on the subject as was very helpful to me!</p>
<p><a href=“http://talk.collegeconfidential.com/financial-aid-scholarships/1082121-school-playing-games-1098t-2.html[/url]”>http://talk.collegeconfidential.com/financial-aid-scholarships/1082121-school-playing-games-1098t-2.html</a></p>
<p><a href=“http://talk.collegeconfidential.com/financial-aid-scholarships/1076108-american-opportunity-tax-credit-scholarships.html[/url]”>http://talk.collegeconfidential.com/financial-aid-scholarships/1076108-american-opportunity-tax-credit-scholarships.html</a></p>