Need help with undergrad scholarship tax situation - missed filing requirements?

I just realized I might have needed to file taxes during my undergrad years (2016-2020). I was claimed as a dependent and honestly thought my parents were handling everything tax-related. For context, my first full undergrad year was 2017, and I managed to find my old 1098-T which showed approximately $14,500 in scholarship income after tuition was paid. This pattern continued for all 4 years of school. From what I can tell, this amount might have been under the filing threshold for dependents from 2018 onwards, but I'm worried specifically about 2017. My parents apparently claimed the education credit that year (and other years), but I never filed anything myself. I just submitted my first tax return last year reporting $0 income. I'm freaking out a bit because by my calculations, I might have a tax liability around $1,400 plus maybe $500 in non-filing penalties from that 2017 year. The thing is, it's been 7-8 years now, and I've never received any notices from the IRS. Should I be concerned about this? Do I need to file something now? I had no idea about any of this when I was 19. Any guidance would be super appreciated!

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18 comments

Ravi Kapoor

•8M

What you're experiencing is actually pretty common among college students. Most don't realize that scholarship money that exceeds qualified education expenses (tuition, required books/supplies) becomes taxable income. For 2017 specifically, dependents generally needed to file if they had unearned income over $1,050 or earned income over $6,350. Your scholarship overage of $14,500 would have triggered a filing requirement. However, there's good news - the IRS generally has a 3-year statute of limitations for assessing additional tax, which would have expired for 2017 already (it would have ended April 15, 2021, assuming no extensions were filed). The exception would be if you never filed at all (which seems to be the case), as the statute doesn't start until a return is filed. But realistically, for relatively small amounts like this where information was likely reported to the IRS through your 1098-T, they typically would have sent notices long ago if they were pursuing it.

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Ravi Kapoor

•8M

The IRS prioritizes their enforcement resources, and small scholarship issues from 7-8 years ago typically wouldn't be high on their list, especially with no indication they've been trying to contact you. The fact that you haven't received any notices is generally a good sign. Regarding your parents claiming education credits, this actually wouldn't create a contradiction in the system. As your parents claimed you as a dependent, they were entitled to claim education credits based on qualified expenses they paid. Your obligation to report scholarship income in excess of qualified expenses is separate from their ability to claim education credits. The 1098-T would have gone to you as the student, and the IRS doesn't automatically cross-check that against parental returns in an automated way.

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Freya Nielsen

•8M

Just went through something similar with my daughter's college scholarships. I found this amazing tool at https://taxr.ai that helped analyze her 1098-T forms and scholarship documents from previous years. It actually broke down exactly which portions of her scholarships were taxable vs. non-taxable and showed what her filing requirements would have been each year. I was totally confused about how much of her merit scholarship was taxable since some covered room and board. This tool explained that housing/meal plan coverage counts as taxable income while the tuition portion doesn't. It even helped determine if she needed to amend any previous returns. Saved us hours of research and calculations!

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Freya Nielsen

•8M

You upload your documents (1098-Ts, scholarship award letters, etc.) and it analyzes everything automatically. It recognizes the different types of scholarships including research stipends, which have different tax treatments. The system highlights which portions are considered taxable income and explains why. The tool specifically addresses statute of limitations questions and helps you determine if filing or amending old returns makes sense based on your particular situation. It factors in the filing threshold for your status each year, potential penalties, and your risk profile. In many cases, it actually recommended against filing old returns when there was minimal benefit or risk.

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Chloe Harris

•8M

Just wanted to update about my experience with taxr.ai after seeing it mentioned here. I uploaded my old 1098-Ts from 2018-2022 and it immediately identified that one of my years had a significant scholarship overage that technically required filing. BUT, it also explained that since I was a dependent that year and the amount fell under a certain threshold after some qualified expense adjustments, I was actually fine. The analysis showed exactly which portions of my fellowships and scholarships were taxable vs non-taxable - turns out my research stipend had different tax treatment than I thought. Anyway, huge relief to know I don't have any lingering tax issues! It saved me from unnecessarily filing old returns while confirming which years I actually needed to address.

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Diego Vargas

•8M

I dealt with a similar scholarship situation and ended up having to call the IRS to sort it out. After days of trying to get through on my own (kept getting disconnected or waiting 2+ hours), I tried https://claimyr.com and got a callback from the IRS in under 2 hours! You can see how it works in this video: https://youtu.be/_kiP6q8DX5c When I finally talked to an IRS agent, they pulled my records and confirmed that for situations like yours where it's been over 6 years with no notices sent, they typically wouldn't pursue anything. The agent explained that the IRS computer systems usually flag unfiled returns within 2-3 years if they think there's an issue. Getting actual confirmation from an IRS agent gave me peace of mind that nothing was lurking in my tax history.

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Diego Vargas

•8M

It's completely legitimate - they use a system that continuously redials the IRS and navigates the phone tree for you. When they reach an agent, they call you and connect you directly. You're actually talking to real IRS agents, not intermediaries. The IRS technically can go back indefinitely for unfiled returns since the statute of limitations doesn't start until a return is filed. However, as a practical matter, the IRS agent explained that they have limited resources and generally focus on more recent tax years and higher dollar amounts. They told me their automated systems typically identify potential unfiled returns within 2-3 years through document matching programs. After 6+ years without contact, while not a guarantee, it's unlikely they would suddenly pursue a relatively small scholarship tax issue, especially for a dependent student.

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Anastasia Popov

•8M

I need to apologize for my skepticism earlier. I decided to try Claimyr after reading about it here, and it worked exactly as described. Got a call back from the IRS in about 90 minutes when I'd previously spent DAYS trying to get through. The IRS representative pulled up my records and confirmed something similar to what the original poster was asking - they said that for older unfiled returns with relatively small amounts (under $25,000 in my case), if they haven't contacted you by now, they likely won't initiate action this far out. The rep explained that while technically the statute never starts for unfiled returns, they have internal guidelines about pursuing older, smaller cases. The peace of mind from talking directly to an IRS agent about my specific situation was absolutely worth it. They even documented the call in their system so there's a record of my inquiry.

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Sean Murphy

•8M

I'm a little surprised no one's mentioned potential state tax implications. Depending on your state, they might have different rules about taxable scholarship income and different statutes of limitations. I found this out the hard way when my state came after me for unfiled returns even after the federal statute had passed. Also, if you're stressing about this, sometimes filing those old returns (if you have all the documentation) can provide peace of mind, even if you're likely in the clear. Just know that if you do file and end up owing, you'll have to pay the tax plus interest and penalties - so it's a personal decision about risk tolerance vs. peace of mind.

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Sean Murphy

•8M

Illinois actually follows the federal statutes of limitations pretty closely for most tax matters, generally 3 years from filing or due date (whichever is later). However, like the IRS, they technically have no time limit for unfiled returns. That said, Illinois typically receives information from the IRS and educational institutions, so if the IRS hasn't flagged your account, Illinois likely hasn't either. State tax authorities usually have even fewer resources than the IRS for pursuing older, smaller cases. If you haven't received notices from Illinois by now, it's even less likely they'll pursue this than the federal government would.

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Ravi Kapoor

•8M

Yes, he should check the box indicating that someone can claim him as a dependent when filing his own return. This is important because it affects his standard deduction amount and eligibility for certain credits. Being claimed as a dependent doesn't eliminate his obligation to file his own return if he meets the filing requirements (which for 2024, for dependents with only earned income, would be income exceeding $14,600). He'll need to report his taxable scholarship income (the portion exceeding qualified education expenses) as income on his return.

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