Question

1. Is financial aid for college subject to federal income tax? 2. Can federal and state...

1. Is financial aid for college subject to federal income tax?
2. Can federal and state education grants be taxed as income?
3. Are student loans taxable?
4. When is a scholarship tax exempt?
5. Do you have to be in a degree program to qualify for tax exemption?
6. When can the cost of textbooks be deducted from gross income for tax reporting purposes?
7. Can the amount of a scholarship used for tuition be deducted?
8. Can living expenses while on scholarship be deducted?
9. Is the income and stipend from a teaching fellowship or research assistantship tax exempt?
10. Are the tuition, books, and stipends of ROTC students tax exempt?

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Answer #1

1.There is selectivity in taxation of the financial purchase and these would be tax exempt in nature for college subject. some of these financial aid are subject to taxation where as some of these financial its are tax exempt in nature.

Scholarship or fellowship which is form of financial aid is tax free, if one is degree candidate and the award which is to be received is used to pay the tuition fees for other equipment fees and books purchases and would be tax exempt in nature.

Other types of of financial aids which is used to pay non qualifying expenditures are taxable in nature.

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