Financial aid is a great way to help pay for your educational expenses. Heading off to college can be expensive with all the tuition and fees, living expenses, and books that you need to keep track of. Scholarships and fellowship grants are great ways for you to lower the amount that you have to spend or take out in student loans so you can spend more time concentrating on your studies and less time worrying about the bills.
If you received any financial aid for your education, you need to make sure that you are following the right rules when it comes to claiming that money on your tax return. Most college students do not realize that in some cases, they will have to claim this money as personal income. Let the professionals at Donna J. Jackson and Associates help you determine if you need to add this to your personal income and assist you with getting your tax return done properly.
What are Scholarships?
Scholarships are basically free money that you can get to help pay for your education. You may get these for having a certain GPA, for studying in a certain field, or being in a group or activity. In most cases you will not have to continue working or meet other conditions once you get the scholarship. These never have to be paid back, regardless of how long you are in school or what you are studying, so they can save you a lot of money in the long run. When the scholarship is used for qualifying educational expenses, you will not have to worry about claiming as personal income.
What are Fellowship Grants?
Fellowship grants are usually grants that have some kind of condition of working or research attached with them. Many graduate students may do some student teaching in order to get the grant or you could be a doctorate student who receives the grant to finish the research. Either way, this money is usually used to help pay for the other costs of your education. If you use it to help with tuition and fees or books for your program, you will not have to claim it during tax season. If you use this as a source of income or in other ways outside of your education, you will need to claim on the tax return.
When Do I Need to Claim on My Taxes?
If you are using the scholarship and fellowship grant money to help pay for qualifying expenses on your education, you will not need to worry about claiming this on your tax return. To avoid claiming the money on the tax return, you need to be able to prove that you are a candidate or attending an accredited educational institution. The degree program usually does not matter. You are able to use the money to help pay for your tuition and fees, as well as any books or equipment that you need in order to attend and do well in the classes.
When you start using the money for other things while in school, such as equipment that is not necessary for your classes or for room and board, you are going to need to claim these as personal income. These are not costs directly associated with attending the educational institution and so the money that is given is not able to go to these things without being counted as income. In addition, unless certain qualifications arise, if you are working or providing services as a condition of receiving the money, you will need to claim it at personal income, regardless of what you use that money for.
To make sure that you are claiming all your financial aid properly on your tax return, make sure to contact the professionals at Donna J. Jackson and Associates. We will be able to look over your unique situation and ensure that you are claiming the right money on your return this tax season.
Getting Assistance With Filing
Understanding when you need to add in your scholarship and fellowship grant information to your personal income on your tax return can be a challenge. Most people assume that this money is free for them to use on their educational expenses and that they never need to claim it at all. But the IRS is going to see this a bit differently and if you don’t properly claim your scholarship and fellowship grant information, you could end up in a lot of trouble.
Luckily, it is pretty easy to add this into your personal income. You can do this right on the tax return without any problems. If you find that you need assistance on this part of the tax return, or you want to make sure that you are claiming the right amount on the tax return this year, make sure to contact the professionals at Donna J. Jackson and Associates. We can help you to get started on the tax return the right way and will ensure that you submit your scholarship and fellowship grants properly.
Scholarships and fellowship grants are a great way to pay for your education. Make sure you understand when you must include these under personal income. Contact Donna Jackson at Donna J. Jackson and Associates, PLLC in Oklahoma City, OK to get started. We can help you with this common tax return question as well as any others you may have. Contact us today to get started.
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