Heads up for those using AROTC scholarship for Room & Board

Discussion in 'ROTC' started by cjs, Nov 11, 2010.

  1. cjs

    cjs Member

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    I know that this has been reported before, but as the new wave of applicants are busy awaiting word on their AROTC Scholarship status, I thought I would post this information so everyone could plan for their college expenses.

    If you are using your scholarship for Room & Board, it is more of a reimbursement. My son passed his test back in August and contracted back at then end of August. His books were paid, his stipend started back in early September and he has been paid for his day of travel to school.

    Room & board has not been paid though we were told we could expect it sometime around Nov. 15.

    Just thought anyone going this route would like to know so they can be well prepared prior to attending school.
     
  2. cjs

    cjs Member

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    So has anyone been reimbursed for their room and board?????

    The semester is winding down and is over in the beginning of December so it just seems extremely late to me. The spring semester be in due shortly for dorms!
     
    Last edited: Nov 18, 2010
  3. havana brown

    havana brown Member

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    Ours was different. Ours showed that room and board was paid for by scholarship. Stipend started in September or October and then at the end of the semester my son got a big lump sum of money in his account. COuldn't figure what it was for. That was because he doesn't read his emails. :rolleyes: He was told he would be receiving the money, but he would have to pay it to the school. And it wasn't for spring semester, it was for fall. I still don't understand, but I just follow instructions.
     
  4. Ohio2015Parent

    Ohio2015Parent Member

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    Haven't had past experience with this, yet...but I also know if scholarships are used for room and board (any type of scholarship) that it become taxable income on the parents (since college kids are "dependent" for tax/FAFSA purposed). So even if the ROTC scholarship covers DS/D tuitition, the universitys often kick in the room, its taxable income. I'm still reading all the IRS forms (yeah, I'm a geek and file my own) so as I figure out more I'll try to remember to post it. DS will use AROTC for room and board if he's awarded out of the remaining 2011 Army boards - he has merit scholarships for tuition. So just be aware of the tax implications as we all find out about scholarships.:wink:
     
  5. paradoxer

    paradoxer Member

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    Better Double Check

    From the IRS website:

    If you are a candidate for a degree, you generally can exclude from income that part of the grant used for:

    * Tuition and fees required for enrollment or attendance, or
    * Fees, books, supplies, and equipment required for your courses.

    You cannot exclude from income any part of the grant used for other purposes, such as room and board.

    http://www.irs.gov/individuals/students/article/0,,id=96674,00.html

    The potentially taxable money is not taxable for the parent but for the student.

    Also there are some new rules regarding ROTC money and other need based aid like Pell and SEOG.

    These rules can change by the moment. I suggest you check with a tax professional and your financial aid office if you find yourself so blessed.
     
  6. Ohio2015Parent

    Ohio2015Parent Member

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    Don't have a finacial advisor/tax professional, I'm the chief bottle washer too:biggrin: I have just begun researching this, so thanks for the links -- IRS web site is so not easy to use. DS has never had income, so I know I'll have to look into the whole mess of whether he files or not - or if he piggy backs on me. I wonder how the stipend gets handled... oh, may we both be blessed enough to have these scholarship tax worries....:wink:
     
  7. Just_A_Mom

    Just_A_Mom Member

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    paradoxer is correct - room and board is taxable and it's on the parent not the student. Dependents can and do file tax returns and even pay taxes.
    Your son can and probably should file for himself. If he does then he will be in a lower tax bracket.

    Stipends are tax free income to the student.
     
  8. Ohio2015Parent

    Ohio2015Parent Member

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    Thanks, I thought the stipend was tax free - but just to clarify, the tax on the scholarship is ON THE STUDENT - I think you miss quoted Paradoxer and put it was on the parent. I know dependents file (his older sister has filed for several years on earned income but never enough to "owe" taxes:smile:) It would be great to file it on him - wasn't looking forward to adding 10K to DH and my 1040 line 37.....that and he can handle calc - he can learn FAFSA and tax forms too:shake:the joys of growing up!!
     
  9. goaliedad

    goaliedad Parent

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    Your son should receive a 1099 from the school indicating how much of his total FA is taxable income to him including the ROTC money. Should arrive around the end of the month like all similar forms. This is the number he should plug into his tax forms (there is a line for this). The IRS gets the same information, so don't get creative with this number.

    The good news is that your son's personal exemption (even if a dependent on your return) is about $5500 IIRC, and the marginal tax rate on the next few thousand (enough to cover the R&B) is 10%. If he had a summer job last year, that would also be taxable (but probably had withholdings if he filled out his w4 correctly), his tax hit should be only about 10% of the R&B above $5500.
     
  10. Just_A_Mom

    Just_A_Mom Member

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    My bad. Must have been a dyslexic moment. Whoops.
    Yes, it is taxable income to the student. This is okay since the student is will (most likely) be in a lower tax bracket than the parent, as goaliedad illustrates.

    Be careful with your 1099-T. Not all schools complete them in the same manner. Keep your own records and spreadsheet. 1099-T's are the most confusing tax documents I have ever received. If you have questions about which numbers are in which boxes and how they arrived at those numbers - feel free to call the school's business office.
     
  11. paradoxer

    paradoxer Member

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    Reminder

    Great advice regarding the 1098-T. Parents usually do hate those things because they often show amounts billed which usually has nothing to do with actual amounts paid.

    Another reminder that with kids in college you should file your taxes in early-mid February so you can file the FAFSA in late February so you can receive all possible financial aid.
     
  12. Just_A_Mom

    Just_A_Mom Member

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    ^
    Yep - when scholarship and financial aid money gets involved it gets really confusing.
     
  13. Ohio2015Parent

    Ohio2015Parent Member

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    That's very true. DS, our hopeful, has yet to have a "real" job...his older sister has worked for years and has merit scholarships we have to factor in for the tax credits, Eastern Kentucky, where she goes has been great about helping figure out the 1099T's for her. As with any IRS document, you can't create numbers, they really don't like that:wink:
     

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