Full Time Student

[RLymanC]

Need clarification on this:

A student age 19 enrolled in college for degree receives scholarships in the amount of $12,000, the qualified tuition and fees are $4,000, $8,000 used for room, board and other non qualified expenses is taxable income to the student.

Question: On page 3-17 of TTB is states that “Support does not include: Tuition and OTHER expenses paid by scholarship received by taxpayers child who is a full time student.

Further down the page it reads: Support provided by others: Scholarships are not considered to be provided by dependent.

My brain is so boggled I don’t know what I’m reading anymore.

Does this mean that the $8,000 is not considered support paid by the child????

Can the parents claim the student as a dependent, take the Hope credit and the student claims $8,000 income and files not claim himself?

[jainen]

change in the way we think

We have to make a major change in the way we think about this. For a Qualified Relative you use the same old rules about paying more than 50% of support. But for a Qualified CHILD the parent does not have to provide the support, as long as it comes from a third party instead of the child himself . Scholarships come from a third party.

It is the same with welfare, but I expect that we will find all sorts of questionable sources. I suppose it's too much to say wages come from a third party, since they are earned by the child's efforts. What about being a trust beneficiary?

[JJ EA]

Hope credit

If all qualified education expenses were paid for with tax-free scholarship funds, the education credits could not be used. If the terms of the scholarship allow the funds to be used to pay expenses other than qualified expenses, you could treat the scholarship as totally taxable and use the amount paid for qualified expenses to figure the credit.