Question

Harris received scholarships this year totaling $15,000. He has $20,000 in qualified educational expenses this year and he is in the 10% marginal tax bracket. He also earned $12,000 part-time as a tutor. How much tax will he owe from the scholarship?

A) $1,500
B) $0
C) $2,000
D) $1,200

Answer 1

Harris will owe $0 in taxes from the scholarship because the full amount can be applied to qualified educational expenses, making it tax-free.

Step-by-step explanation:

The student's question asks how much tax will be owed from the scholarship. Since Harris received scholarships totaling $15,000 and has qualified educational expenses of $20,000, the entire amount of the scholarship can be applied towards these expenses, making it tax-free. Therefore, none of the scholarship money would be subject to income tax. His part-time earnings as a tutor are separate and should be taxed according to the marginal tax rate but are not part of the scholarship amount. Considering these details, the correct answer is B) $0.