Taxable portion of scholarship

[swimcatsmom]

<p>You can still claim him as a dependent on your taxes. This would mean he gets the standard deduction ($5450 for 2008) but not the personal exemption ($3500). You would take the exemption ($3500) because you claim him as a deduction.</p>

<p>My personal opinion - Books qualify for the calculation of whether a scholarship is taxable as long as they are required for the course. it says so quite specifically in IRS 970.</p>

<p>

• 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.

They do not count for the Hope Tax credit unless they are required and are required to be bought at the school.

Related expenses. Student-activity fees and expenses for course-related books, supplies, and equipment are included in qualified education expenses only if the fees and expenses must be paid to the institution as a condition of enrollment or attendance.

</p>

<p>The Hope and the taxable scholarships are two separate rules within IRS970. Every different tax benefit within IRS has different definitions of qualified expenses (for instance room and board is a qualified expenses for 529 accounts) but people mix up the requirements for one (Hope) with the other (scholarships). My 10 cents worth. </p>

<p>In the new rules for the 2009 & 2010 education credit in the stimulus package required books will be allowed so perhaps that will lessen peoples confusion.</p>