<p>My H has been perusing the tax instructions, and they seem to say that any scholarship money paid for things except for tuition, books, fees for courses, and other directly course-related costs is TAXABLE INCOME. In other words, grants covering room and board, general fees, health insurance fees, et al would be taxable. </p>
<p>I can't believe this is true! Any experience?</p>
<p>Correct.
Think about this. Living expenses will be incurred whether one is in school or making income. However, there may be some interpretation for some items that pertain to expenses that must be incurred for attendance. ie health insurance and fees. </p>
<p>not an expert. consult others of better knowledge. We erred on the side of being conservative in the deductions.</p>
<p>How about being REQUIRED to live on campus and have a meal plan, which he is?</p>
<p>If he were not in school, he could be living here, which would involve no added expense for rent and a lot less than a meal plan for food!</p>
<p>That is what my H said. We were just on a border because of very expensive science books. I guess even them poor kids sweating over grades is considered to be a job that they get paid for in Merit scholarships. Best of luck!</p>
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Scholarships Taxable Income? </p>
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<p>My H has been perusing the tax instructions, and they seem to say that any scholarship money paid for things except for tuition, books, fees for courses, and other directly course-related costs is TAXABLE INCOME. In other words, grants covering room and board, general fees, health insurance fees, et al would be taxable. </p>
<p>I can't believe this is true! Any experience?
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<p>Consolation, there have been many threads on the subject and you'll find many similar queries in the Financial Aid subforum.</p>
<p>However, it is not very complicated once you understand a basic principle: Consider ALL scholarship income taxable and then reconcile all qualified expenses to match that income. You correctly listed the expenses that could and should be deductible --although books are debatable. Please realize that the school might report the income and expenses on the 1098 in a manner that does not give the best deduction as schools tend to use billable expenses versus paid expenses.</p>
<p>Yes scholarships and need based grants over the amount of tuition/fees/required books are taxable income to the student. The relevant IRS publication is IRS 970
<a href="http://www.irs.gov/pub/irs-pdf/p970.pdf%5B/url%5D">http://www.irs.gov/pub/irs-pdf/p970.pdf</a></p>
<p>Take the time to read through all of it and see which tax benefit may be the most beneficial to your family. For instance sometimes it may be better to use some scholarship money to pay for room and board even though that makes it taxable income, and pay some tuition and fees out of pocket if that makes you eligible for something like the Hope tax credit. You can generally choose which tax credit to take based on which is the most beneficial for you.</p>
<p>Xiggi is right regarding 1098's also. D got one for tuition aid at a place that "does not give scholarships" but in the end treats any discount as a scholarship and generates a 1098.</p>