Tax Information and Links
Frequently Asked Questions
Why do we have this topic on our
web?
Part or all of scholarships,
grants, fellowships and work-study or other student
employment wages may be required to be reported as income
for tax purposes. (More information here) Therefore we have provided some information
to assist our students and their parents with this topic. As
always, please consult the IRS, a tax information specialist or
other tax professional for complete information. This
information is only
intended as a guide.
Tax Information For Students - IRS
Federal tax return.
There are minimum levels of taxable income above which a person is
required to file a federal tax return for the year. If your
total income, including any taxable portion of financial aid
and/or work-study, is below the minimum that requires you to
file a return, many of these topics will not apply to
you.
Tax forms - Need federal
tax forms? Go here:
Work-study earnings are wages. You should include
these with your earnings from any other job in determining
if you are required to file a tax return for the year.
You will be sent a Form W-2 from the University at the end of January
each year detailing your wages. If you file a tax return,
you should include a copy of the Form W-2 with your return.
Contact the Internal Revenue Service if you have questions.
Duplicate Form W-2
If you moved or otherwise did not receive your
Form W-2 (statement of wages earned) from the University by the end of January, you have the ability
to print a duplicate from the University's Payroll website at: http://www.wsu.edu/payroll/deptpay/2007w2fastfacts.htm
(second item on the page).
Form 1098T
Washington
State University must furnish a
statement (Form 1098T) to you. The
law says that schools must send this information in the form of
a statement to each eligible student and to the IRS.
You
will use the information on the 1098T and your own records/receipts
of
books and course-related supplies you purchased during the tax year to determine
how much (if any) of your financial aid is considered subject to
taxation. (See below for more
information on how to make this determination.)
The 1098T is mailed to the student's
mailing address.
[Note: this is mailed to you by January 31, 2008, for
the 2007 tax year].
- If you have not received the form by
mid-February you may contact University Receivables/Student
Accounts for a re-print.
- Student Accounts
- 342 French Admin Bldg
PO Box 641039
- Washington State University, Pullman, WA, 99164-1039
- Email: univ-receivables@wsu.edu (509)
335-9651
For the 2007 tax year, the 1098T statement will include:
- the name, address, and taxpayer
ID number of the school;
- the amount of tuition and required fees
that were paid for and/or by the student between January 1, 2007
and December 31, 2007.
- the name, address, and taxpayer ID
of the student for whom tuition was paid;
- the amounts and types of possibly taxable
scholarships, grants, and fellowships that were paid to the
student between January 1, 2007 and December 31, 2007.
- whether the student
was enrolled at least half-time;
- whether the student was
enrolled only in a graduate-level program.
(The following information was taken
from the IRS website)
IRS Help Line
- 1-800-829-1040
Keyword: Scholarships
4.8 Interest/Dividends/Other Types of Income: Grants,
Scholarships, Student Loans, Work Study
I received an academic scholarship that is designated to be used for tuition and books. Is this taxable?
Qualified scholarships and fellowships are treated as tax-free amounts if all of the following conditions are met:
1. You are a candidate for a degree at an educational institution,
2. Amounts you receive as a scholarship or fellowship are used for tuition and fees
required for enrollment or attendance at the educational institution, or for books, supplies, and equipment required for courses of instruction, and
3. The amounts received are not a payment for your services.
For additional information on Scholarship and Fellowship Grants, refer to Tax Topic 421, and Publication 970, Tax Benefits for Education.
References:
7.4
Other Credits:
Hope & Life Time
Learning Educational Credits
How
is the amount of the Hope or Lifetime Learning Credit determined?
The amount of the credit is determined by the amount you pay for
qualified tuition and related expenses paid for each eligible
student and the amount of your Modified Adjusted Gross Income
(MAGI).
References:
What
expenses qualify for the education credits?
Expenses that qualify are tuition and fees required for enrollment
or attendance at any college, vocational school, or other
post-secondary educational institution eligible to participate in
the student aid programs administered by the Department of
Education.
Qualified expenses do not include books, room and board, student
activities, athletics (unless the course is part of the student's
degree program), insurance, equipment, transportation, or other
similar personal, living, or family expenses. The cost of books and
equipment are generally not qualified expenses because eligible
educational institutions usually do not require that fees for such
books or equipment be paid to the institution as a condition of the
student's enrollment or attendance at the institution.
References:
Are
expenses to attend private high schools eligible for the education
credits?
No. Expenses paid to attend high school do not qualify for the
education credits because a high school is not an eligible
educational institution. An eligible educational institution is any
college, university, vocational school, or other post-secondary
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) post-secondary institutions.
References:
Can I claim an education credit if I am
married but file separately?
No. Neither the Hope Credit nor the Lifetime Learning Credit can be
claimed if the individual is married but filed a separate return.
References:
If I
pay college tuition and fees with a scholarship, can I claim an
education credit on Form 8863 for those payments?
No. You cannot claim a credit for the amount of higher education
expenses paid for by tax-free scholarships.
References:
If
the amount of qualified tuition and fees I pay is greater than the
amount of my scholarship, should I fill out Form 8863? If I cannot
use Form 8863 because I received a scholarship, what can I do?
You must reduce the qualified expenses by the amount of any tax-free
educational assistance. Do not reduce the qualified expenses by
amounts paid with the student's earnings, loans, gifts,
inheritances, and personal savings. Also, do not reduce the
qualified expenses by any scholarship reported as income on the
student's return or any scholarship which, by its terms, cannot be
applied to qualified tuition and related expenses.
References:
If tuition was paid by a government
subsidized loan, can I still take the Hope or Lifetime Learning
Credit?
If you take out a loan to pay higher education expenses, those
expenses may qualify for the credit if you will be required to pay
back the loan. The credit is claimed in the year in which the
expenses are paid, not in the year in which the loan is repaid.
References:
Who
can claim the Hope Credit?
Generally, you can claim the Hope Credit if all three of the
following requirements are met.
1. You pay qualified tuition and related expenses of higher
education.
2. You pay the tuition and related expenses for an eligible student.
3. The eligible student is either yourself, your spouse, or a
dependent for whom you claim an exemption on your tax return.
You cannot claim the Hope Credit if any
of the following apply.
-
Your filing status is married
separately.
-
You are listed as a dependent
in the Exemptions section on another person's tax return (such
as your parents'). See Who Can Claim a Dependent's Expenses,
later.
-
Your modified adjusted gross
income can not be above a certain dollar amount. This
information is in Publication
970, Chapter 2. Modified adjusted gross income is explained
later under Does the Amount of Your Income Affect the Amount of
Your Credit.
-
You (or your spouse) were a
nonresident alien for any part of the tax year and the
nonresident alien did not elect to be treated as a resident
alien for tax purposes. More information on nonresident alien
can be found in Publication
519, U.S. Tax Guide for Aliens.
-
You claim the Lifetime
Learning Credit for the same student in the same year. This
information is found in Publication
970, Chapter 2.
In general, qualified tuition and
related expenses are tuition and fees required for enrollment or
attendance at an eligible educational institution.
Eligible Education Institution. An eligible educational
institution is an college, university, vocational school, or other
post-secondary 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.
To claim the Hope Credit, the student for whom you pay qualified
tuition and related expenses must be an eligible student.
This is a student who meets all of the following
requirements
-
Did not have expenses that
were used to figure a Hope Credit in any 2 earlier tax years.
-
Had not completed the first 2
years of postsecondary education (generally, the freshman and
sophomore years of college) before this tax year.
-
Was enrolled at least
half-time in a program that leads to a degree, certificate, or
other recognized educational credential for at least one
academic period beginning in the tax year.
-
Was free of any federal or
state felony conviction for possessing or distributing a
controlled substance as of the end of the tax year.
References:
What is
a Lifetime Learning Credit?
A nonrefundable tax credit up to a certain dollar amount per family
for all undergraduate and graduate level education. The Lifetime
Learning Credit is calculated by taking a percentage of the
qualified educational expenses paid. This information is found in
Publication 970, Chapter 3.
References:
Who is
eligible for the Lifetime Learning Credit?
Generally, you can claim the Lifetime Learning Credit if all three
of the following requirements are met.
-
You pay qualified tuition
and related expenses of higher education.
-
You pay the tuition and
related expenses for an eligible student.
-
The eligible student is
either yourself, your spouse, or a dependent for who you
claim an exemption on your tax return.
The Lifetime Learning Credit is
based on qualified tuition and related expenses you pay for
yourself, your spouse, or a dependent for who you can claim an
exemption on your tax return. Generally, the credit is allowed for
qualified tuition and related expenses paid in the tax year for an academic
period beginning in that year or in the first 3 months of the
following year.
For purposes of the Lifetime Learning Credit, an eligible student is
a student who is enrolled in one or more courses at an eligible
educational institution.
An eligible educational institution is an college, university,
vocational school, or other post-secondary 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)
post-secondary institutions. The educational institution should be
able to tell you if it is an eligible educational institution.
You cannot claim the Lifetime Learning Credit if any of the
following apply.
-
Your filing status is married
filing separately.
-
You are listed as a dependent
in the Exemptions section on another person's tax return
(such as your parent's). See Who Can Claim a Dependent's
Expenses, later.
-
Your modified adjusted gross
income is above a specified amount. Modified adjusted gross
income is explained later under Does the Amount of Your
Income Affect the Amount of Your Credit.
-
You (or your spouse) were a
nonresident alien for any part of the tax year and the
nonresident alien did not elect to be treated as a resident for
tax purposes. More information on resident aliens can be
found in Publication 519, U.S. Tax Guide for Aliens.
-
You claim the Hope credit for
the same student in same year.
References:
Can the
Lifetime Learning Credit be used for a high school student taking
classes at an approved college prior to graduation from high school?
College courses taken while attending high school may qualify for
the Hope Scholarship Credit or for the Lifetime Learning Credit if
the student meets the qualifications for claiming either of the
credits.
References:
Topic 421 - Scholarship and Fellowship Grants
http://www.irs.gov/taxtopics/tc421.html
If you receive a scholarship or fellowship grant,
all or part of the amounts you receive may be tax–free.
Qualified scholarship and fellowship grants are treated as tax–free amounts if all the following conditions are met:
-
You are a candidate for a degree at an educational institution that maintains a regular faculty and curriculum and normally has a regular enrolled body of students in attendance at the place where it carries on its educational activities;
-
Amounts you receive as a scholarship or fellowship are used for tuition and fees required for enrollment or attendance at the educational institution, or for books, supplies, and equipment required for courses of instruction; and
-
The amounts received are not a payment for your services.
However, if you receive a scholarship award under the National Health Service Corps Scholarship Program or the Armed Forces Health Professions Scholarship and Financial Assistance Program, the amount received is tax free without regard to any services you are obligated to perform.
You must include in gross income amounts used for incidental expenses, such as room and board, travel, and optional equipment, as well as amounts received as payments for teaching, research, or other services required as a condition for receiving the scholarship or fellowship grant.
If any part of your scholarship or fellowship grant is taxable, you may have to make estimated tax payments.
References:
Taxable scholarships are reported on line 7 of
Form 1040 (PDF) or
Form 1040A (PDF) or line 1 of
Form 1040EZ (PDF). If you did not receive a Form W-2, please write "SCH" and the taxable amount to the left of the line.
References:
Can I exclude from taxable income the room and board portion of a grant or fellowship?
No, you cannot exclude from income any part of the grant used for room and board. A scholarship generally is an amount paid for the benefit of a student at an educational institution to aid in the pursuit of studies. The student may be in either a graduate or an undergraduate program. A fellowship grant generally is an amount paid for the benefit of an individual to aid in the pursuit of study or research. Report this amount on line 7 of
Form 1040 (PDF) or
Form 1040A (PDF) or line 1 of
Form 1040EZ (PDF).
If you did not receive a Form W-2, please write "SCH" and the dollar amount to the left of the line.
References:
Do I need to report income made as a work study student at my college?
Yes, payments you receive as compensation for services are wages and includable in gross income. Report these payments as wages on line 7 of
Form 1040 (PDF) or
Form 1040A (PDF) or line 1 of
Form 1040EZ (PDF).
References:
13.6 Aliens and U.S. Citizens Living Abroad:
Nonresident Alien - Students
Are nonresident alien students, with F-1 or J-1 visas and employed by a U.S. company during the summer, required to have federal income taxes withheld from their paychecks?
The following discussion generally applies only to nonresident aliens. Wages and other compensation paid to a nonresident alien for services performed as an employee are usually subject to graduated withholding at the same rates as resident aliens and U.S. citizens. Therefore, your compensation, unless it is specifically excluded from the term "wages" by law, or is exempt from tax by treaty, is subject to graduated withholding. Nonresident aliens must follow modified instructions when completing Form W-4. Please refer to Publication 519, U.S. Tax Guide for Aliens, for directions on completing Form W-4 (PDF), Employee's Withholding Allowance
Certificate.
References:
Publication
970 Tax Benefits for Education contains information on:
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