Previous semester as an undergraduate student, I won a pretty big scholarship from my university. So, along with the Pell Grant and other state grants/scholarships, that amount was also applied to my tuition and book fees this semester, and the rest was reimbursed to me.

As far as I know, and correct me if I'm wrong, any scholarship or grant money that is not used for educational costs (books, tuition, equipment, etc.) is taxable. Now, I was reimbursed a total of $3k for this semester. Some of that money will go towards transportation and food, and some money will be leftover. Though the total amount of money I receive is still less than the COA, the $3k I was reimbursed will go towards non-educational costs.

So would my $3k be considered taxable income? If so, would the income be considered earned or unearned when it comes to determining whether I need to file a tax return? If its considered earned, than I might not need to report it based on current limits. Also, I am filed as a dependent. Does that change anything?


Yes, it's taxable. Confirm it with this IRS free tool.

See if you can apply more of the money to qualified, required educational expenses. If you can reduce the $3k in unearned income to $2100, there will be no need to fill out Form 8615 (the kiddie tax).

You may be able to claim an educational tax credit, in any case.

  • Thanks for the answer. I do have two questions though. In the article you have linked, it talks about how the gross unearned income is reduced by the dependent's standard deduction. It provides an example with a student using $18k for non-education purposes and $12,200 is subtracted from it to only yield $5800 taxable income. What is that deduction for? Also, would I be able to get education tax credits if I don't file a tax return?
    – ARJ
    Aug 26 at 4:56
  • There's another IRS free tool for "do I have to file?": irs.gov/help/ita/do-i-need-to-file-a-tax-return If the answer is 'yes', then using tax software should help you figure out how the deductions work, after you enter "Yes, I can be claimed as a dependent" in the tax software. Aug 26 at 20:39
  • Okay, so when I use that IRS tool, I list the $3k as unearned income right?
    – ARJ
    Aug 26 at 23:23
  • 1
    Yes, that is right. Aug 27 at 0:35

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