A 1040A Question.

[UnbiasedObserver]

My wife finished her master's degree last year.

Did I have to put her scholarship/grant aid in line 7, under income?

One school is saying yes, but here's what the I.R.S.'s instructions say on page 21 of 80:

http://www.irs.gov/pub/irs-pdf/i1040a.pdf

It states that scholarships MUST be reported, but in the next sentence, seems to state that one does not if they're related to tuition (which her scholly was) AND the person is a degree candidate.

Am I missing something here?

This is stressing me out.  I really don't want to have to amend my taxes!

[upgrade]

If you were a degree candidate, include on line 7 only the amounts used for expenses OTHER THAN tuition and course-related expenses.  For example, amounts used for room, board, and travel must be reported on line 7.

I read this as: Scholarship + Grant - Tuition - Books - Fees - other school expenses = x.

[UnbiasedObserver]

If you were a degree candidate, include on line 7 only the amounts used for expenses OTHER THAN tuition and course-related expenses.  For example, amounts used for room, board, and travel must be reported on line 7.

I read this as: Scholarship + Grant - Tuition - Books - Fees - other school expenses = x.

That's what I thought at first glance, but for my wife it seems like that means it would actually be negative number.  Her room and board along with traveling due to her master's program is actually probably on par with her scholarship+grant.

So what then?  I'm not going to decrease my total income then, am I? That doesn't sound right.

[upgrade]

Room, board, and travel are things you do NOT consider against the grant amounts.  This may be different if they were integral to her degree program, though. 

In either case, what do you get for x with the above equation, without considering the room, board, and travel associated with her degree?

[Bulldog86]

If it's negative, put zero, but that means that her scholly was LESS than tuition, fees, and books. If that's the case, then that's fine. But since you mentioned room and board, it's hard to tell. Any schol/grant money you use for room, board and travel DOES have to be reported. "Other school expenses" cited by upgrade should be just stuff that's required, like course materials or lab fees. Living expenses, you're on your own.

At least that's my understanding.

[UnbiasedObserver]

Room, board, and travel are things you do NOT consider against the grant amounts.  This may be different if they were integral to her degree program, though. 

In either case, what do you get for x with the above equation, without considering the room, board, and travel associated with her degree?

Sorry for the delay; I worked tonight!

On her 1098-T (i.e., her tuition statement), it shows that she was billed over $4,000 this year alone in tuition.  That's without even calculating the other school-related expenses.

Her scholarship/grant aid on ther 1098-T is only $3,696.

So I'm getting a negative number.

That's why I  don't understand why a school is giving me such a hard time about this.  Only one school out of 22 to which I applied has done this to me.

If I was wrong, why has only one school mentioned it? I find that hard to believe. 

[UnbiasedObserver]

If it's negative, put zero, but that means that her scholly was LESS than tuition, fees, and books. If that's the case, then that's fine. But since you mentioned room and board, it's hard to tell. Any schol/grant money you use for room, board and travel DOES have to be reported. "Other school expenses" cited by upgrade should be just stuff that's required, like course materials or lab fees. Living expenses, you're on your own.

At least that's my understanding.

Yeah, it's negative.  I should be fine. (I hope!)

I think the school was confused probably because I put on Worksheet C of the FAFSA scholarship/grant money.  I guess maybe I wasn't supposed to do that, because it states in parenthesis (as reported as AGI). 

Since this wouldn't be reported as AGI, perhaps I messed up, at an disadvantage to me. 

Do I really need to worry about it if it is discovered that it is a disadvantage to me?

Thanks for all of your help.  I really appreciate it. 

[UnbiasedObserver]

My family talked to an I.R.S. employee and the school that was questioning the figure.

It turns out that I did NOT have to report the money on Worksheet C of the FAFSA.  As long as the money is applied towards tuition (which is was), and NOT towards other expenses like room and board, it doesn't count as income. 

That makes sense.  So I don't have to amend my taxes.  Whew!