Taxable scholarships?

[Pseudonymous Electron]

On 12/20/2012 07:32 AM, Mike or Penny Novack wrote:
>
>>
>> Ah, OK, this makes sense. I was kinda hoping that there would be
>> something in the tax options that would cause this to be figured
>> automatically (i.e. so it would update itself if I corrected a
>> mis-categorized expense or something), but this will suffice, at least
>> for now.  Thank you for the advice.
>
> I'm not at all sure what you mean by this. In what way (except for the
> final manual adjustment) would what I suggested not be "automatic"?

The "final manual adjustment" is what I was thinking about.  The thing I 
was (slightly) concerned about is that if I performed the "final 
adjustment" and only *then* discovered that there is an error in my 
textbooks account, I would need to remember to correct the "final 
adjustment" after correcting the original error.

For example, suppose that I decided that a sparknotes study guide counts 
as a "textbook", and I included that expense on my "textbooks" account. 
  Suppose I then performed the "final manual adjustment" and sent my 
records to a tax accountant.  Suppose the accountant gets back to me and 
says that the study guide doesn't count as a "textbook" since it wasn't 
actually required by the course.  (I dunno if s/he would say that, but 
let's imagine s/he does.)  Then I would need to perform a correcting 
transaction transferring that expense out of the "textbook" account, but 
I would *also* need to make a correcting transaction transferring the 
same amount from "non-taxable scholarship" to "taxable scholarship". 
There's a risk that I might forget the latter if I was in a hurry.

But I know that I'm nit-picking at this point: the risk is small, and I 
can deal with it.  I expect that the approach you suggested should work 
just fine.  Thanks again for your advice.

Have a good one,
P. Electron