student financial aid

[NotEasy]

Is there any situation that a dependent child's financial aid has to be reported on the tax return of his parents?

The reason I asked this question is that according to the instruction of Fafsa (federal student financial aid application) application form, they want the student to add their taxable financial aid to the AGI of their parents (if I have understood their instruction correctly).

[Koss]

Taxable Financial Aid

Taxable financial is pretty rare.

It can only happen when grants and scholarships exceed the cost of tuition and other qualifying educational expenses.

When that happens, it is the student, not the parents, who reports the taxable portion of the scholarship on line 7 of Form 1040.

So I don't understand why FAFSA would direct the applicant to add this amount to the parents' AGI, because it's already included in the student's AGI.

Check the FAFSA instructions for the section where the student reports their income for the year. Maybe it tells the student to report their AGI minus any taxable scholarship.

BMK