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I am an independent college student, and I will be living on campus starting next semester. I am aware that only tuition and required fees are considered as qualified education expenses and that the rest of the amount going toward room and board, textbooks, and refunds are taxable.

According to my calculations, the amount of scholarships going toward room and board and refund in 2015 is going to exceed the filing threshold of $10,150, perhaps around $15,000. This would mean that I have to file a federal tax return. However, I heard of some things called "standard deduction" and "personal exemption." I have never filed taxes before, so I have no clue as to what effects they have on me.

My question is, will standard deduction and personal exemption bring down my number, to the point that I will not be required to file a federal tax return? If some things are unclear, or if my assumption is incorrect, please let me know. Thank you.

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    While it may be obvious, it would be great for you to state what country your question applies to. – JoeTaxpayer Jul 27 '15 at 22:24
  • It is a graduated income bracket. The first $10000 still gets taxed at the lower rate, the next $5000 gets taxed at the next rate. The whole $15000 doesn't get taxed at the high rate, but believe me the difference is largely negligible – CQM Jul 28 '15 at 13:30
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The requirement of having to file a tax return is different from the requirement of having to pay taxes. You must file a tax return if your income is above a certain amount. It may well be that when you complete all the forms, the standard deduction and the personal exemption etc result in your tax liability for that year being zero. But that does not exempt you from the requirement that you file the tax return.

You can file a tax return if your income is below the threshold requirement for filing a tax return, and many people do so. This is because they have had income tax withheld from wages or IRA distributions, Social Security benefits, pensions, etc. If the calculations on the tax forms shows that they owe less tax (possibly zero tax) than what was withheld, the IRS will refund the difference to them. If they don't file a tax return on the grounds that they are not required to do so, that money is likely gone forever.

Typically, taxes are not required to be withheld from scholarships and the like and many institutions do not withhold taxes (but will do so if requested). So, if taxes were withheld from your scholarship amount because you requested this or your institution's financial system automatically withholds taxes, you certainly should file a tax return to get your money back.

Finally, while many States that collect income taxes base their tax structure on the income shown on the Federal income tax return, some States have their own rules, and so don't forget about State tax returns, and especially if you have had State income tax withheld.

  • Thank you for the detailed explanation. I have previously confirmed with my state's department of revenue that scholarships and grants are not taxed. The school did not withhold taxes from my financial aid, and I don't work, so I don't think I am due any refund. It seems that I will have to file a return and will be paying a bit of tax, according to a clear cut answer from @JoeTaxpayer♦. Thank you everyone. – Skipher Jul 28 '15 at 18:44
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The standard deduction is built into the tax forms. Just follow the instructions.

  • Agreed. This seems like a pretty clear case where following the directions in the "Do I have to file?" section will produce a clear answer. – dg99 Jul 27 '15 at 21:47
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Assuming you are in the US, in 2015 the standard deduction is $6300, and exemption, $4000. $10,300 total. With no other credits or deductions, the next $9,225 of income is taxed at 10%.

If your room and board are $15,000, you are looking at under $5000 taxable income and about $500 tax. This assumes you aren't working. If you are, of course that income is added on.

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