If tuition is paid with scholarship money can you apply for life time learning credit?

Question

If one gets a graduate school felloship that pays for tuition and other expenses such as room, board, etc. can you report the entire scholarship as income and then claim life time learning credit or do you subtract the portion paid for tuition and report the balance as taxable income. The former method appears to result in lower tax.

Answer 1

You need to complete the worksheet in chapter one of the Publication 970 to determine the amount of the Scholarship that may be taxabe to you. Using the amount from the work sheet will help determine if you qualify for the Lifetime Learning credit by using the worksheet in chapter 3 of the Publication 970,

http://www.irs.gov/pub/irs-pdf/p970.pdf

Answer 2

The amount you report should be what is above and beyond what is covered by scholarships or grants. If what is paid to you is reported to you on a W-2 as income then you can go with your former method. Good luck.

Answer 3

It depends on the nature of the "fellowship".

If it's in the nature of a grant or a scholarship, then none of it is taxable, and therefore you can't claim any education credits.

However, if it's in the form of a loan or some sort of payment for work, then you can claim the credit.

Answer 4

No, if you don't actually pay the tuition and fees, you can't take an education credit for it. But you wouldn't have to pay tax on the part of the fellowship that was paying the tuition and fees either.

Answer 5

yes no