<p>We still don’t seem to be on the same page concerning the books issue but I’m going to indicate what we have done and see what everyone thinks. Our son is on full scholarship at the Univ. of TN. We as parents have paid nothing. He is a freshman and so has completed only one semester in 2008. His total scholarship was $9000 (box 5) and his amount for qualified tuition and related expenses was $3135. That leaves a difference of $5865, a bit over the standard deduction. Since he is in a lower tax bracket, we would prefer that HE pick up the “income” of $5865 (he did not work - that’s ALL of it for the year). </p>
<p>I believe that means (and anyone correct me if I am wrong) that we would then not claim him on our taxes, thereby costing us the $3500 (exemption) X 0.25 (our marginal bracket) or $875. However, if we had claimed him, we would have reduced our income by $3500 for the exemption but increased it by $5865 for the scholarship. The difference is $2365, which X 0.25 = $591.25 (over and above the $875). Thus, it’s best to let him file for himself since his taxes won’t be anything close to $591.25 and maybe nothing if books qualify (books were close to $600).</p>
<p>Am I making sense? Thanks to all who weigh in on this.</p>
<p>Gator in NE TN</p>