Financial aid refunds?

Forum|Forum|5 years ago
February 16, 2021
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Hello, I have a question about my financial aid. I recieved financial aid to attend college full time in 2020. I also recieved a refund as the amount of financial aid I recieved was more than my tuition. This is reflected on my 1098-t as the amount in box 5 is larger than the amount in box 1. Do I report my financial aid refund as earned income or unearned income? This will largely impact whether or not I have to file taxes for 2020. Thank you.

Not A Product Question

Hal_Al

Employee

Q. Do I report my financial aid refund as earned income or unearned income?

A. Simple answer: earned income. T

But, not exactly. Taxable scholarship is "considered" earned income for purposes of the dependent filing requirement ($12,400) and for purposes of calculating a dependent's standard deduction (his earned income + $350, but not more than $12,400). It is not earned income for the Earned Income Credit or qualifying to an IRA contribution.

TurboTax will add taxable scholarship to line 1 of form 1040, with the notation SCH to the left of line 1

So, if you have no other unearned income (interest, dividends, capital gains, unemployment, "other" income), you do not need to file If you less than $12,400 total income,