If on campus living is required, is housing scholarship still taxable?

Paying for College
1

I understand that amount over tuition and qualified education expenses (books and fees, I think) of a scholarship is taxable. In sum, room and board are taxable.

One of our middle sons has a scholarship offer for full cost of attendance. As part of his scholarship, he is required to live on campus (and living on campus requires purchasing a meal plan). In fact, all freshman must live on campus (and he will receive room and board all 4 years if he stays on campus…part of the incentive I believe is to have high performing kids on these scholarships be present, active and involved on campus)

We are eternally grateful for the opportunity and will gladly pay the tax on room and board if required. But I am wondering if in his case the room and board are qualified educational expenses since he MUST have them in order to accept the scholarship…in fact in order to attend the school?

If so, then the scholarship would not be taxable at all.

Our oldest daughter received a full ride and we paid tax on room and board. But in his case I am not sure what the outcome will be. Any thoughts on the IRS stance on this?

2

If it is not used on QEE, it is taxable.

3

Yes. Scholarships for housing and food are still taxable. They are not qualified EDUCATIONAL expenses. The are living expenses. There is a difference.

4

That is what I thought (aforementioned responses). My spouse however said “If the college is requiring it (that our son MUST live on campus in the honors dorm) in order to receive the education there, then it is is a sense an educational expense in his case.”

This is more of a discussion out of interest in our home than anything else. Trust me, we know that paying tax on a small portion of a full ride is nothing to complain about!

Well, decision season is in full swing now around here. Let the games begin (spreadsheets, 504 plan statements, follow up visits, and of course College Confidential!).

5

Sure, but in the eyes of the IRS, it’s not a qualified education expense.