Wednesday, March 10, 2010

Qualified Education Expenses

For the purposes of tax-free scholarships and fellowships, these are expenses for:

Tuition and fees required to enroll at or attend an eligible educational institution.

Course related expenses, such as fees, books, supplies, and equipment that are required for the courses at the eligible educational institution. These items must be required of all students in your course of instruction.

However, in order for these to be qualified education expenses, the terms of the scholarship or fellowship cannot require that it be used for other purposes, such as room and board, or specify that it cannot be used for tuition or course-related expenses.

EXPENSES THAT DON'T QUALIFY

Qualified education expenses do not include the cost of:
Room and board
Travel
Research
Clerical help
Equipment and other expenses that are not required for enrollment in or attendance at an eligible educational institution.

This is true even if the fee must be paid to the institution as a condition of enrollment or attendance. Scholarship or fellowship amounts used to pay these costs are taxable.

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