Question regarding scholarships and taxes owed

Forum|Forum|4 years ago
April 11, 2022
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Both my kids have student loans and scholarships. One has $17025 from scholarships and grants and her payments per 1098-T is $13940. She only made roughly $3400 this year. I ran her stuff through turbo tax and it is saying she owes federal $987 and then state is about $613. Only one of her jobs took out fed taxes in the amount of $3 and the college did not take out any for her job on campus. Do these numbers even sound right? We did put down that she paid $5334 out of scholarships for room and board but it just seems like almost $1600 in taxes is a bit much (though that is better than $17K in student loans that she would have to pay if she did not have the scholarships).

My son is kind of in the same situation but his total between fed and state is around $1000.

Hal_Al

Employee

Q. Do these numbers even sound right?

A. No.

If her $3400 of income was reported on a form 1099-NEC, TurboTax will treat that as self employment and "self employment (social security & medicare) tax" (SET ) will be due. But still not $1600.

Otherwise, you are correct $3400 of W-2 wages + $5334 of taxable scholarship is not enough (less than $12,550) to generate any income tax. You've entered something wrong. Review form 1040 and schedule 1 to see where it is being reported. Both wages and taxable scholarship should show up on line 1 of form 1040.

mjmommy2001Author

So somehow her line 1 is $20752 so I am thinking somehow I got the wages and her scholarships as income? I put down that she got $17025 in scholarships and then later how much she had for room and board. Please, how do I correct this? I will be looking over their returns later today.

mjmommy2001Author

I am looking and I see on the earned income worksheet, line 11, I have her scholarship info which puts her income over $20K. Ugh, I think next year we may just hire someone. lol.