FAFSA Help: Putting in scholarships, grants, etc. on FAFSA

[swimcatsmom]

<p>cap - the IRS 970 is very confusing as what is considered a ‘qualifying expense’ varies according to which education tax benefit you are looking at. </p>

<p>My understanding is that:
For calculating taxable scholarships/grants books are allowed. (if you look at that section of the publication there is no specification - is that a word? - that books must be purchased through the school - just that they are required in the class).
For qualifying expenses for 529 withdrawals books (and room and board) are allowed.
For Hope, lifetime and tuition/fees deductions books are not allowed if they can be bought from other sources.</p>

<p>I am not a tax expert but that is my understanding of the very wordy and confusing rules.</p>

<p>from the IRS qualified expenses for taxable scholarships/grants

Qualified education expenses. For purposes of tax-free scholarships and fellowships, these are expenses for:</p>

<pre><code>*

Tuition and fees required to enroll at or attend an eligible educational institution, and
*

Course-related expenses, such as fees, books, supplies, and equipment that are required for the courses at the eligible educational institution. These items must be required of all students in your course of instruction.
</code></pre>

<p>However, in order for these to be qualified education expenses, the terms of the scholarship or fellowship cannot require that it be used for other purposes, such as room and board, or specify that it cannot be used for tuition or course-related expenses.

</p>

<p>From the IRS qualified expenses for hope/lifetime/tuition&fees deduction

Eligible educational institution. An eligible educational institution is any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the Department of Education. It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. The educational institution should be able to tell you if it is an eligible educational institution.</p>

<p>Certain educational institutions located outside the United States also participate in the U.S. Department of Education’s Federal Student Aid (FSA) programs.</p>

<p>Related expenses. Student-activity fees and expenses for course-related books, supplies, and equipment are included in qualified education expenses only if the fees and expenses must be paid to the institution as a condition of enrollment or attendance.

</p>

<p>and for good measure qualified expenses for 529 account withdrawals

Qualified education expenses. **These expenses are the amounts paid for tuition, fees, books, supplies, and equipment required for enrollment or attendance at an eligible educational institution (defined in the next column).</p>

<p>They also include the reasonable costs of room and board for a designated beneficiary who is at least a half-time student. The cost of room and board qualifies only to the extent that it is not more than the greater of the following two amounts.**</p>

<p>1.</p>

<pre><code> The allowance for room and board, as determined by the eligible educational institution, that was included in the cost of attendance (for federal financial aid purposes) for a particular academic period and living arrangement of the student.
</code></pre>

<p>2.</p>

<pre><code> The actual amount charged if the student is residing in housing owned or operated by the eligible educational institution.
</code></pre>

<p>

</p>

<p>As you can see the definition of qualified education expenses varies according to the tax exemption being taken. As the rule for hope etc specifically states the books must be paid to the institute and the rule for taxable scholarships does not state this I am reading that as being able to take the books as a deduction for scholarships/grants. Did not use books for the hope credit for my son. Did use them for his 529 withdrawal.</p>