Do I have to pay taxes on my student loans and grants?
I have a few student loans from last year and a couple pell grants. And since tax season is almost here, i just want to know whats going to happen? Do i pay taxes on the money i recieved for college? Also, I barely worked bc i was taking so many classes. But I have to file to recieve further financial aide. So am i going to pay out of pocket? or will the taxes still be income based?
Tags: grants, Loans, Student, Student Loan, Taxes
No. Loans are not income.
I just answered a similar question a few minutes ago. So here it is & hope it helps.
Student Financial Aid refers to funding intended to help students pay educational expenses including tuition and fees, room and board…, right? So being taxable depends on what kind of FinAid. Two main ones are:
1. Qualified scholarships and fellowships are treated as tax-free amounts if all of the following conditions are met:
-You are a candidate for a degree at an educational institution,
-Amounts you receive as a scholarship or fellowship are used for tuition and fees required for enrollment or attendance at the educational institution, or for books, supplies, and equipment required for courses of instruction, and
-The amounts received are not a payment for your services.
2. Qualified Student Loans are not taxable at the time you get the money and should not be included as income in your return. A loan is not income, because you are expected to repay the amount borrowed (plus interest). Interest is deductible.
Qualified Student Loan
- This is a loan you took out solely to pay qualified education expenses that were:
- For you, your spouse, or a person who was your dependent when you took out the loan,
- Paid or incurred within a reasonable period of time before or after you took out the loan, and
-For education provided during an academic period for an eligible student.
! Loans from the following sources are not qualified student loans. So should include as income & taxable.
- A related person
- A qualified employer plan.
Any student earned income to finance education is taxable.