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Does a client have to pay taxes on scholarship income for their child?

Level 2
 
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6 Replies 6
Level 11
Level 11

It may or may not be taxable. Depends on each situation. 

IRS.gov, look up Topic No. 421 dealing on taxability of scholarships.

Level 2

Great!  Thank you...

Level 11
Level 11

🙂 Anytime!

Level 7
Level 7

The child may have to pay income tax on scholarship income they recieved greater than qualified education expense.  The parent would not have to pay on any scholarship income the child recieved.

Level 2

Hello, and Thank you for the response...but another question...even if the parent claims the child as a dependent, they still do not have pay taxes on the scholarship income and the scholarship does exceed education expenses...they use some of the scholarship for room and board, so who would have to pay taxes on that portion...the child or the parent in this case?

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Level 7
Level 7

Even if claimed by parent, the child claims the excess scholarship income as income on their (childs) tax return.  If under age 24 and income is above $2,100 then the child may have to pay tax at parent's rate on form 8615, but it is still the child's income.