My return dropped when I entered my full-time student status. Why is that?

Forum|Forum|4 years ago
February 1, 2022
1 reply
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My refund was pretty decent. It then dropped to almost nothing. Is that because I receive Financial Aid?

Update: I was able to put in the cost of books and supplies and raise it a bit. It’s fine because I get a FAFSA refund I was just bummed out because I work 40 + hours a week so. Better luck in 1.5 years when I’m done with school haha

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Best answer by DanaB27

Yes, it can be because of your Financial Aid. Any scholarship amount (do not include any loans here) that exceeds qualified expenses (tuition, fees, books, and other course materials) is taxable income.

Please see Are my scholarships, fellowships, or grants taxable? and Why is my scholarship taxable? for additional information.

DanaB27Answer

Please see Are my scholarships, fellowships, or grants taxable? and Why is my scholarship taxable? for additional information.

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Hal_Al

Employee

There's a new urban myth among college students that says they can get a $1000 from the government just for filing a tax form. For most of them, they simply aren't eligible. A full time unmarried student, under age 24, even if you don't qualify as a dependent, is only eligible for the refundable portion of the American Opportunity Credit if he supports himself by working. You cannot be supporting yourself on parental support, 529 plans or student loans & grants. You usually must have actually paid tuition, not had it paid by scholarships & grants. It is usually best if the parent claims that credit.

You cannot claim a credit if you are, or can be, claimed as a dependent by someone else.

Reference: Line 7 instructions for form 8863. https://www.irs.gov/instructions/i8863

charleiasanders-Author

I work full time, always have. And I have a daughter, her dad is claiming her though. So the financial aid thing checks out but my parents haven’t claimed me in 4 years.