|
|
Which types of educational assistance may be classified as "Gift Aid and Fee Reductions"? |
 |
Why isn't a total provided for "Gift Aid and Fee Reductions" on the "Information for IRS Form 8863"? |
|
I received a lot of financial aid. Am I still eligible for an education tax credit? |
|
Was my scholarship from an outside agency or foundation included with "Gift Aid and Fee Reductions"? |
|
Should I report my scholarship or fellowship as income or as gift aid? |
|
Is work-study money classified with "Gift Aid and Fee Reductions"? |
The information provided in this web page is NOT tax advice. It is offered only as general information for UCI students and their families. Please consult a qualified tax expert for advice on computing, claiming, or determining qualification for any tax benefit mentioned in this web site.
Answer: UCI classifies the following types of educational assistance as "Gift Aid and Fee Reductions": grants, scholarships, fellowships, traineeships, stipends, outside-sponsored awards, third-party billing arrangements, tuition/fee remissions, waivers, and exemptions.
[top]
Answer: The situation is complicated by the fact that the IRS has not issued final instructions to colleges and universities describing how to report financial information. In the absence of institutional guidelines, schools have relied on the instructions to taxpayers found in IRS Publication 970: Tax Benefits for Higher Education [download].
Calculations involving "gift aid and fee reductions" require knowledge of the taxpayer, as well as the type of aid. The "Adjustments to Qualified Expenses" section for either the Hope or Lifetime Learning credit in IRS Publication 970: Tax Benefits for Higher Education [download], states that educational assistance should be subtracted from "qualified education expenses" only if the aid is tax-free. The University does not record whether or not a taxpayer has reported "gift aid and fee reductions" as taxable income; therefore, we cannot make calculations with the aid as if it were tax-free.
[top]
Answer: Possibly. Financial aid potentially diminishes a student's eligibility for an education tax credit by offsetting the amount of "qualified education expenses." To have this effect, the aid must be classified as "gift aid" (which a student is not required to repay) and as "tax-free educational assistance." Loans (which a student must repay), work-study earnings (which are taxed), and "gift aid" reported as income (which is taxed) do not reduce the amount of "qualified education expenses." (See the "Adjustments to Qualified Expenses" section for either the Hope or Lifetime Learning credit in IRS Publication 970: Tax Benefits for Higher Education [download] for further discussion.)
Individual circumstances, such as the taxability of a student's "gift aid," make it impossible for the University to apply a standard formula for determining eligibility. Students with questions about the taxability of their "gift aid" may wish to consult Publication 520: Scholarships and Fellowships [download] for more information. Furthermore, there are additional criteria for determining eligibility, other than the amount of "gift aid." Questions about eligibility should be directed to a tax professional or to the IRS.
[top]
Answer: Scholarships disbursed through UCI's Financial Aid Office were included in the "Grants and Scholarships" category in "Part 2: Gift Aid and Fee Reductions" on the "Information for IRS Form 8863" supplemental form. Scholarships issued directly to the student may not be recorded.
To determine if a scholarship was included in your tax information, access
your record at http://www.1098-t.com/access/login.asp?.
After using the 
selection to view the
financial information on your "Information for IRS Form 8863", click on any link
for "Grants and Scholarships". Financial details for any scholarships
recorded at the University will be displayed on the web page. Note that
reporting scholarships appropriately on a tax return is the responsibility of
the student, taxpayer, or tax preparer.
[top]
Answer: The rules for reporting these types of educational assistance are discussed under "Scholarships and Fellowships" in IRS Publication 520: Scholarships and Fellowships [download].
If a portion of your scholarship or fellowship is taxable, you may receive a Form W-2: Wage and Tax Statement [download] with instructions for entering the information into your tax return. If you think that you are missing a W-2 form issued by UCI, then review the information at Payroll Accounting. The absence of a W-2 form does not mean necessarily that the educational assistance is tax-free. If you are unsure about the tax treatment of your scholarship or fellowship, ask the granting agency, a tax professional, or the IRS.
[top]
Answer: No. Although a work-study award may be part of your financial aid package, the money is considered to be student earnings. The Form W-2: Wage and Tax Statement [download] issued by UCI's Payroll Accounting Office has an explanation of the W-2 Form to assist you in entering information into your tax return.
[top]
The information provided in this web page is NOT tax advice. It is offered only as general information for UCI students and their families. Please consult a qualified tax expert for advice on computing, claiming, or determining qualification for any tax benefit mentioned in this web site.
|
|
U.S. Department of Education (800) USA-LEARN or TTY (800) 437-0833 ¤ "Families' Guide to the 1997 Tax Cuts for Education" ¤ The HOPE Scholarship and Lifetime Learning Credits |
|
|
Internal Revenue Service (800) 829-1040 or TTY/TDD (800) 829-4059 Along with general information about TRA 97, the IRS website also offers these specific links: ¤ Notice 97-60: Education Tax Incentives ¤ Publication 970: Tax Benefits for Higher Education ¤ Tax Topic 605: Education Credits ¤ FAQ: Hope & Lifetime Learning Educational Credits ¤ Tax Trail: Education Tax Credits |
