37% Income Tax Rate on Basketball Scholarships?

[Aargh]

I know the article is from the NY Times, and I know that publication is negative toward Republican policies, but according to this article, scholarships for anything other than tuition is taxed as high as 37%. The article specifically states athletic scholarships are subject to the tax, which would tax books, room and board, laundry money, etc.

https://www.nytimes.com/2019/05/17/u...D1Ty955tDMrtsw

[Dark Lord]

Government loves stealing as much money as it can get away with.

[im4wsu]

Government loves stealing as much money as it can get away with.

Gotta pay for all the freebies and for the riches of legislators.

[Rocky Mountain Shock]

But I thought the new tax law was great and Trump could do no wrong. Was I deceived??? Gasp, no way.

[wufan]

But I thought the new tax law was great and Trump could do no wrong. Was I deceived??? Gasp, no way.

Right on one, wrong on two.

[C0|dB|00ded]

*just wakes up*

Trump? What? Who? Is it 2020 yet? *Starts stretching out voting arm in preparation to steroid-yank it in The Trumpster's favor.

GD if that portly old man ain't makin' this country great... AGAIN.

Meanwhile... The Dims can't be bothered with silly matters like GDP, immigration, and rogue nations... they're too busy pandering to the legion of intersectional pronouns operating out of mama's basement.

CB OUT!


T


...:cool:

[Aargh]

Uh, guys, I tried to make a thread pointing out that basketball players on scholarship have to pay taxes on their scholarships. That affects WSU basketball.

That was probably an oversight or unintended consequence in the tax code, Something like that can happen regardless of which political party was in the majority when the oversight occurred. This can be corrected by Congressional action, but voters need to be aware that a correction is needed or we may not see one.

[Kel Varnsen]

Overall, I agree with simplifying the tax code and am generally a fan of the new tax law that was passed. However, this is an aspect of it that I do not like. It hurts kids that it should be helping.

[ShockBand]

I imagine the same rules apply to the students who win the big scholarships in the Distinguished Scholarship Invitational. The three Harry Gore Memorial Scholarships are now $64,000 awards, and I think there are some others in the DSI that would exceed tuition, fees, books, and supplies.

[SHOCKvalue]

We’ve already had a income tax cycle (or two?) since the new tax policy was put into force, have we not? If that’s correct (it might not be, I’m asking) then why haven’t we seen waves of humanity already sharing real world accounts?

[rjl]

2018 was the first year for the new tax code. The article states that the "impact on full-time undergraduate and graduate students ... went largely unnoticed until the waning weeks of tax season." So it's an article on an issue that was first noticed a little over a month ago.

[Dan]

I can see the point, although I would say books should not be subject to tax. You could argue that anything above books and tuition that is used to live (rent, groceries, etc.) is really just a subsidized income. I might even go a step further and give an allowance for room and board but it would have to be capped at a certain amount.

[jdshock]

It's possible I'm misreading your post or the underlying article, but I don't think the issue is so much that the money is taxable; the issue is that it is subject to the "Kiddie Tax" which historically taxed the money at the parents' marginal tax bracket even if the child cannot be claimed as a dependent: https://en.wikipedia.org/wiki/Kiddie_tax

[Dan]

my bad, I did not read the article. Thanks

[shocktown]

If you had no other income other than the scholly, would you have enough income that you would owe Federal tax. Gov. Kelly probable would have you pay state though!

[Kung Wu]

It needs to be fixed, no argument. However, the average kid on scholarship is now paying $325/month to go to college, instead of $111. That's a big jump percentage-wise, but we are talking about getting full tuition at a four year university, a place to stay, and food to eat for $325/mo.

Then consider that student athletes on full scholarship from lower income families can qualify for up to $6,095 in Pell Grants.

If you subtract the $6,095 Pell Grant from the maximum tax burden of $3,900, some kids are paying NOTHING to go to college and in fact are getting paid $2,195 to go to school.

Now obviously, they are missing out on $2.5k of income they had the year prior over and above the $2.2k, but still -- they still have a surplus of $2.2k _after_ paying taxes.

Yes it needs to be fixed, no it's not a crisis.

[shock]

This reeks of a power move to push public schools to offer tax payer funded education.

[rjl]

How so?

[shock]

Tax scholarships and affording college becomes impossible. Then you get outcry for the government to fix it and make higher education a right.

It’s the same thing they tried to do with health care. They implemented a broken system so people would want to move to a single payer system instead, because healthcare has been deemed a right (it’s not).

[rjl]

shock, that takes quite a bit of a leap of logic, especially considering it was a full republican effort that passed this tax code in the first place, and campaigned-for and signed by the guy in your avatar. If what you said was true, why wouldn't the same powers that enacted this tax code just have done what you claim they are targeting to do?

You could far more easily surmise that it's an effort to widen the gap between the rich and the poor, based on the same facts you've used to draw your conclusion.

In actuality, it could very well just be a product of ramming this tax code through congress without taking the time to look at all the outcomes. Time will tell if it's addressed.

[rjl]

For those who haven't read the article, the salient portions:

Congress originally established the [kiddie-tax] in the bipartisan 1986 tax reform law, then tweaked it in a 2003 tax package passed under President George W. Bush. It forces children to pay taxes on both earned income — like salaries from summer jobs — and unearned income, like stock dividends and nontuition scholarships.

The different types of income have different rates, and until the Trump tax overhaul passed, the rate for unearned income was tied to how much a child’s parents earned. That meant scholarship winners from low-income families, whose parents had little or no federal income tax liability, also faced low tax rates.

***

In the past, a student from a household with a joint income of $50,000 who was awarded a scholarship that covered $11,500 in room and board would be taxed at their parents’ rate of 12 percent. Under the new law, that money would be taxed up to 35 percent.

The article states that the change in tax law also affects the survivor benefits given to families of service members who died in combat. Although there has been strong bipartisan support to fix that issue, progress has been slower as it pertains to scholarship recipients.