My daughter received a full scholarship to college, including tuition and room and board. Will any of the money be taxable? --K.M., Kokomo, Ind.
Unfortunately, yes. Scholarships are tax-free up to the cost of tuition and course-related expenses, such as books and supplies. Money for anything else not required for enrollment, including housing and travel, is taxed as income. And any scholarship money received as payment for services, such as teaching or assisting in a lab, may be taxed.
Luckily, scholarships are generally taxed at the student’s income tax rate and not the parents’, so taxes will usually be much lower.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
-
Over 50 and Still Paying Student Loans? Here's Some HelpIt's the club no one wants to join. But if you are over 50 and still paying student loans, there are ways to tackle both debt and retirement savings.
-
Eight Estate Planning Steps to Protect Your Loved Ones (and Your Legacy)Two-thirds of Americans don't have an estate plan. If you're one of them, these are the essential steps to take now to prevent problems for your family later.
-
The American Opportunity Tax Credit (AOTC): How Much Is It Worth?Tax Credits This tax break can help you offset $2,500 in qualifying expenses tied to your higher education. Here's what you need to know.
-
Are Scholarships Always Tax-Free? What You Need to KnowEducation Scholarships are generally tax-free if certain IRS and other requirements are met.
-
Student Loan Forgiveness Blocked For Now Due to Court RulingsBiden's student loan debt forgiveness program is on hold until the U.S. Supreme Court weighs in.
-
529 Plan Contribution Deadlines529 Plans Many states have year-end deadlines for making 529 college savings plan contributions.
-
Biden Extends Student Loan Relief, Is Loan Forgiveness Next?Coronavirus and Your Money On his first day as president, Joe Biden continued the suspension of student loan payments until October.
-
How to Help Grandchildren Pay for CollegePaying for College Follow these tax-saving strategies while gifting money to help fund their education.
-
It’s Not Too Late to Boost Retirement Savings for 2018retirement Some retirement accounts will accept contributions for 2018 up until the April tax deadline.
-
How to Correct a Mistake on Your RMDs from IRAsretirement If you didn't take out the correct required minimum distribution because your brokerage firm made a mistake, the IRS may show some leniency.
