Overwhelmed Mom of High School student

txpotato said:
Or school or thought number 3: choose a school where he already has merit money based on ACT/SAT scores. If he's fortunate enough to get an ROTC scholarship, he can apply that money to R&B and he will go to school for FREE, provided the school allows stacking. That is what my two sons have done at the University of Alabama. They are literally getting paid to go to school. As an aside, Alabama provides VERY generous scholarships to out of state students, and we have been very pleased with the Crimson Tide Battalion.
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Great solution! Just a note that Army ROTC scholarships are tax free when used for tuition and fees. However if you use the scholarship for room and board it becomes taxable income. It is still okay to do this. Just be aware of the different IRS tax treatment.

From IRS Pub. 970:
A scholarship or fellowship grant is tax free only to the extent:
  • It doesn't exceed your qualified education expenses;

  • It isn't designated or earmarked for other purposes (such as room and board), and doesn't require (by its terms) that it can't be used for qualified education expenses; and

  • It doesn't represent payment for teaching, research, or other services required as a condition for receiving the scholarship. For exceptions, see Payment for services, later.
source:
https://www.irs.gov/publications/p970/ch01.html
 
Longhaul said:
@txpotato, His GPA will not be high enough for a scholarship from Bama. His brother is currently a student there and he will be applying regardless of no merit money. Even paying full price OOS tuition, UA is relative in cost to our in-state options of Pitt or Penn State Erie since our in-state charges more for upper level engineering and UA is generous with AP and CLEP. If you don't mind, can you private message me so I can learn more about the Crimson Tide Battalion?
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I tried to PM you, but it wouldn't let me. I think I read somewhere that you have to have at least ten messages before you can send or receive them. Post away, and then let's chat!
 
gokings814 said:
Great solution! Just a note that Army ROTC scholarships are tax free when used for tuition and fees. However if you use the scholarship for room and board it becomes taxable income. It is still okay to do this. Just be aware of the different IRS tax treatment.

From IRS Pub. 970:
A scholarship or fellowship grant is tax free only to the extent:
  • It doesn't exceed your qualified education expenses;

  • It isn't designated or earmarked for other purposes (such as room and board), and doesn't require (by its terms) that it can't be used for qualified education expenses; and

  • It doesn't represent payment for teaching, research, or other services required as a condition for receiving the scholarship. For exceptions, see Payment for services, later.
source:
https://www.irs.gov/publications/p970/ch01.html
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Does anyone know what amount of taxes has to be paid for room and board? Is it based on our income, or the state we live in or state school is in? I ask because UNG's tuition for the semester is about $2600, but room and board is about $5000. The taxes have to be pretty high for us to not put DS's scholarship toward room and board.
 
It is treated as ordinary income, so it will depend on your other income as well as what state you're in for state income taxes.
 
wisbang35 said:
Does anyone know what amount of taxes has to be paid for room and board? Is it based on our income, or the state we live in or state school is in? I ask because UNG's tuition for the semester is about $2600, but room and board is about $5000. The taxes have to be pretty high for us to not put DS's scholarship toward room and board.
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If you're thinking about using the scholarship for R&B, make sure you look into the availability of tuition tax credits or (pre-adjusted gross income) Form 8917 tuition deductions.
 
Longhaul said:
Thank you all!

@ENwifeArmyMom , Widener is one that I was considering nixing because without a ROTC scholarship it is more than we can swing financially. Maybe I'll reconsider. He has several friends who will be starting there in August. I also am not a fan of the area.

@USMA 1994 , my oldest actually attends a big SEC school. Although my ROTC wanna be kid wants colder weather, we certainly have many southern universities on our list. The number of Mechanical Engineering jobs in the South were a big consideration when my oldest made his final determination.

I can't thank you all enough for helping a Newbie.
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@Longhaul I agree about the area, in the end that was a deciding factor for us. That being said, before she got a scholarship the financial aid package from Weidner was surprising good! We met with the ROO there and he was very nice too. It might be wrong to judge ROTC programs on their ROOs but we did and it worked very well for us.
 
Also throwing out there Clarkson University is great for engineering, very well respected in the engineering world.
 
My son's GPA was a 2.975 at the end of his junior year. He was able to get full points, however, on the interview, because the score is rounded to the nearest tenth, not nearest 1/100th decimal point. He got an AROTC 4-year at his #1 school. After reading all of this information on these forums, I am convinced that the multiple choice aptitude/personality test that is administered online as part of the application is REALLY important. It carries weight equivalent to the interview process. On paper, my son wasn't the best candidate if you only look at GPA and ACT (his was a 28). But he nailed the interview, presumably nailed the multiple choice test, was in 3 varsity sports all 4 years of high school, was a captain in all three sports his senior year and 2 of them in his junior year. Most importantly, I believe, the PMS' comments on the subjective portion of the interview were incredibly supportive. We had visited that campus and the cadre three times and interviewed there in person, a 1,000 mile trip, one way. His application was in for the 1st board and he was awarded a 4-year to all three of his choices on the 1st board. As for listing an in-state option, we didn't want to do that, either, but did it because that was the rule. Looking for an affordable engineering school? Try Univ of Wyoming (go pokes!). After one year you can get in-state tuition which is under $5,000 a year. Out of state tuition is roughly $16,000.
 
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wisbang35 said:
Does anyone know what amount of taxes has to be paid for room and board? Is it based on our income, or the state we live in or state school is in? I ask because UNG's tuition for the semester is about $2600, but room and board is about $5000. The taxes have to be pretty high for us to not put DS's scholarship toward room and board.
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It wouldn't be taxed as your income, it would be the student's income. So unless they earn over $9000 a year, it won't matter.
 
tjb1975 said:
It wouldn't be taxed as your income, it would be the student's income. So unless they earn over $9000 a year, it won't matter.
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I agree with tjb, the R&B Income would show on your son's taxes so if he doesn't show a lot of income the tax burden would be very low if at all. I wouldn't put the R&B income on your taxes.
 
I thought the taxation was changed in 2013 to be taxed at the Parent Rate as Unearned Income
 
Longhaul said:
I thought the taxation was changed in 2013 to be taxed at the Parent Rate as Unearned Income
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This is complicated....and while I am a CFP(r), I am not a CPA or tax attorney. Here is a great chart that can help you determine who gets charged the income:

original.png


Source:
https://ttlc.intuit.com/questions/2...oes-he-he-has-other-income-and-files-a-return
 
Interesting chart. Our accountant has always talked about the kids filing their own returns regardless even if they are dependents. So the education money is the difference?
 
tjb1975 said:
Interesting chart. Our accountant has always talked about the kids filing their own returns regardless even if they are dependents. So the education money is the difference?
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I agree with your accountant, as it keeps "earned income" differentiated.

Scholarship and education money is treated differently based on who is claiming the expenses, parents or the kid. The chart helps figure that out.

Again, I'm not a tax preparer or accountant.

This document is the ultimate source:
https://www.irs.gov/pub/irs-pdf/p970.pdf
 
gokings814 said:
I agree with your accountant, as it keeps "earned income" differentiated.

Scholarship and education money is treated differently based on who is claiming the expenses, parents or the kid. The chart helps figure that out.

Again, I'm not a tax preparer or accountant.

This document is the ultimate source:
https://www.irs.gov/pub/irs-pdf/p970.pdf
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I, too, am neither a tax preparer nor an accountant. :) If there is no 1098 I wouldn't worry about it, personally.
 
tjb1975 said:
I, too, am neither a tax preparer nor an accountant. :) If there is no 1098 I wouldn't worry about it, personally.
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OP should still look into it even if there is not a 1098. Things such as the American Opportunity Credit and others may apply. It's always smart to go to your CPA if you want to maximize the benefits.

I should add that income= income from whatever source derived.
 
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