Scholarships and Qualified Educational Expenses

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Subject Author Date Scholarships and Qualified Educational Expenses Steve 07-25-2009  Re: Scholarships and Qualified Educational Expense... Mark Bole 07-25-2009
Posted by Steve on July 25, 2009, 3:05 pm Please log in for more thread options My daughter was awarded a small scholarship from a local foundation. The scholarship was paid directly to her and she plans to use the money to pay for books. Am I correct to assume that regardless of whom the scholarship is paid to and regardless of what it is spent on, all scholarship awards must be subtracted from the qualified educational expenses when calculating the expenses eligible for the Hope credit (or any other educational tax credit/deduction)? Thanks. -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by Mark Bole on July 25, 2009, 11:03 pm Please log in for more thread options Steve wrote: > My daughter was awarded a small scholarship from a local foundation. > The scholarship was paid directly to her and she plans to use the > money to pay for books. It will be tax free *only* if she is a degree candidate and the books are *required* by the school for all students taking the same course(s). Am I correct to assume that regardless of > whom the scholarship is paid to and regardless of what it is spent on, > all scholarship awards must be subtracted from the qualified > educational expenses when calculating the expenses eligible for the > Hope credit (or any other educational tax credit/deduction)? In your situation, that sounds like a true statement. However in general it is only true if the scholarship was tax-free. If the scholarship was included in taxable income, then it could be used as a qualified expense for the credits. In other words, no double-dipping (two tax benefits for the same expenditure). See IRS Pub 970. -Mark Bole -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Similar Threads Posted what are Qualified adoption expenses September 24, 2009, 6:18 pm Is this educational grant tax free? January 7, 2007, 10:51 pm Attending educational seminars and tax deduction April 12, 2006, 11:28 pm TurboTax Deluxe BUG! Educational Tax Credit (form 8863) February 27, 2007, 4:14 pm Calculation of interest paid on educational loan for tax rebate January 12, 2009, 11:11 am Qualified Charitable Distribution from IRA January 7, 2007, 11:11 pm Qualified plans out of compliance June 29, 2007, 6:07 pm Qualified production activity? March 15, 2008, 10:17 am Ordinary and Qualified Dividends? April 4, 2008, 12:16 am Non-Qualified Variable Annuity June 10, 2006, 4:19 pm