Dependent filing a tax return

[Questionguy101]

Suppose a student:

(1) had $3,300 of scholarship/financial aid left after paying for the qualified education expenses in 2006.

(2) had no other source of income in 2006.

(3) is a dependent of his parents in 2006.

Is he required to file a tax return?

Publication 17 says a dependent who had more than $850 of unearned income is required to file. Is scholarship/financial aid considered unearned income? If it is, then the student is required to file. Am I correct?

But when I put the numbers into my tax program, there is no tax. The tax program let the student use his standard deduction to offset all the scholarship/financial aid (yes I have told the program that he is a dependent). So, if there is no tax, does it mean the student is not required to file?

So is he required or not required to file?

Or does it mean that the student is required to file a tax return even if there is zero tax?

[JoshinNC]

No

Scholarships/Fin. Aid are not income. They are used to determine dependency, though.

[Questionguy101]

Scholarships/Fin. Aid are not income. They are used to determine dependency, though.

I think Pub 17 says they are income after deducting all the qualified education expenses.

[Gene V]

If he was living in Oregon he would have to file, he would owe Oregon $73.00

I would do a 1040EZ for Federal with the $3300 line1 with SCH on dotted line.

[JoshinNC]

Scholarship and financial aid are not the same,

Suppose a student:

(1) had $3,300 of scholarship/financial aid left after paying for the qualified education expenses in 2006.

(2) had no other source of income in 2006.

(3) is a dependent of his parents in 2006.

Is he required to file a tax return?

Publication 17 says a dependent who had more than $850 of unearned income is required to file. Is scholarship/financial aid considered unearned income? If it is, then the student is required to file. Am I correct?

But when I put the numbers into my tax program, there is no tax. The tax program let the student use his standard deduction to offset all the scholarship/financial aid (yes I have told the program that he is a dependent). So, if there is no tax, does it mean the student is not required to file?

So is he required or not required to file?

Or does it mean that the student is required to file a tax return even if there is zero tax?

Is the financial aid grants, loans or scholarship. Loans used to pay for expenses other than QHEE are not taxable income and neither are grants. So, you need to determine how much cam from each category and then determine whether the dependent exceeds $3300 in taxable income.

[Questionguy101]

Is the financial aid grants, loans or scholarship. Loans used to pay for expenses other than QHEE are not taxable income and neither are grants. So, you need to determine how much cam from each category and then determine whether the dependent exceeds $3300 in taxable income.

Sorry if I have not make myself clear.

The financial aid that I have mentioned is not loan. I should have said scholarship/grant. I know loan is not taxable because it has to be repaid in the future.

What I was trying to say is after paying for the qualified education expenses, anything left from scholarship and grant is considered income according to Pub 17.

[Dervis]

Scholarship income

According to Pub. 970, page 6, taxable scholarships are reported on line 7, wages. So the standard deduction should cover up to $5150 of income.

[Gretel]

....and with all taxable scholarships treated as wage income no requirement to file Federal tax return. Maybe state?

[Taxref]

If not already factored in, qualified educational expenses for the purposes of taxability of scholarships and grants includes books and other supplies. That could have a bearing if your state uses federal AGI as a starting point.