Tax Returns 2024: Parents, Beware of Children’s Scholarships

Unexpected Surprises in the 730/2024 Tax Return

The 730/2024 tax return could hold some bitter surprises for many taxpayers this year.
In some cases, on the first page of the 730 form where the available and used data are summarized, the declaration of dependents section may show a message that many do not understand.

In certain situations, the data regarding dependent children may not be considered for tax purposes anymore, even if they are not employed.
Of course, the taxpayer can still choose to include this information (at their own risk) despite the warning, but let’s first understand the reasons behind this before deciding what to do.

Family Situation and Non-Dependent Children

Over the years, the pre-filled 730 form, as well as the simplified 730 tax return, has become increasingly enriched with new information.
The goal seems to be to provide individuals with a declaration that is already filled out and just needs to be reviewed before submission.

This year, a common issue arose concerning dependent children: even children who are not employed might no longer be considered as dependents for tax purposes.
The explanation provided for why the data is not used often cites that the child had income exceeding €4,000 (if they are under 24 years old, or over €2,840 if they are 24 years old or older).

In such cases, the main problem lies not in the children’s income from work, but rather in potential scholarships they may have received.

Scholarships are Considered as Income

Receiving a scholarship generates income if the recipient is not in an employment relationship with the entity providing it.
Some scholarships are exempt from taxation and do not contribute to the taxable income.
These include scholarships granted to university students by ordinary statute regions, those provided for specialization courses, research activities, and post-doctorate studies, and certain scholarships within specific programs like “Socrates.”

Consequences of High Scholarship Income

When a child receives a scholarship exceeding the threshold to be considered a dependent for tax purposes, the parents not only lose the benefits related to dependent deductions but also the potential deductions for expenses incurred for that child’s education.
However, the expenses could still be deducted by the child if they file their own tax return.

It is important to refer to the Italian Revenue Agency’s instructions regarding deductions and tax credits, considering the various articles of the income tax code and the general principle that guides the deductibility and tax credits of expenses.