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Are FA grants taxable income?

neatoburritoneatoburrito Posts: 3,449Registered User Senior Member
edited January 2009 in Prep School Parents
Does anyone know if money awarded for FA is taxable? I doesn't seem like it should be, but that doesn't mean the IRS would see it that way.

I apologize if this is a really stupid question.
Post edited by neatoburrito on

Replies to: Are FA grants taxable income?

  • watertesterwatertester Posts: 534Registered User Member
    FA to cover tuition, fees or even books and supplies (not 100% sure) is non taxable, but the amount used to cover living expenses including travel may be taxable.
  • pan1956pan1956 Posts: 528Registered User Member
    If FA monies are not taxable, then does it make sense that tuition is not tax deductible? Put another way, if tuition is paid with after-tax dollars, then why is FA not taxed???
  • 4yorkshiremen4yorkshiremen Posts: 602Registered User Member
    Well, the school isn't actually receiving money from itself when you get a FA award. Perhaps it is just agreeing to have you attend for less.?

    At my daughter's school they say that the per student cost to run the school is close to 80K, but tuition is 40K - so all students can be said to be getting FA in a sense. This amount is not taxable.

    I have heard of graduate school tuition awards being taxable. It is an interesting question.
  • anothermom2anothermom2 Posts: 1,731Registered User Senior Member
    pan1956, this is not based on logic; there is a specific section of the IRS tax code that applies. I think it should be tax deductible, but no one is out there listening. It is sometimes a problem if the grant is over the amounts that are excluded (i.e. room and board is not excluded) because then tax will be due. Maybe the institution grosses the grant up to include taxes, but this is not something I have experience with, or expect to.

    Publication 970 (2008), Tax Benefits for Education
  • baseballmombaseballmom Posts: 1,602Registered User Senior Member
    No, FA is not taxable.

    Pan1956--the argument would be that if tuition was tax-deductible when paid, then FA would be taxable income.

    I agree w/Grejuni about graduate awards being taxable. I'm no expert on this by any means, but I recall seeing it in the IRS code while researching education expenses. I'll cross that bridge when Imy kids get to it!
  • anothermom2anothermom2 Posts: 1,731Registered User Senior Member
    Didn't see your post Grejuni, since I was typing, but the Publication linked above answers a lot of questions. I think there are some tax credits available for college, and the publication also discusses those.
  • emdeeemdee Posts: 481Registered User Member
    What portion of the 40K tuition is used for room and board?
  • baseballmombaseballmom Posts: 1,602Registered User Senior Member
    Parents, there is no need to worry! Boarding school FA is not taxable!

    Once your child is in college you need to separate tuition and fees from room and board, etc. when calculating education tax credits and/or deductions.
  • PhotoOpPhotoOp Posts: 1,186Registered User Senior Member
    You people are trying to give me a heart attack. Thanks baseballmom for saying what I wanted to hear.
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