Tax Tips & Calculators

If you apply for financial aid, you might need to provide a copy of your federal return. If you filed Form 1040 (1040, 1040A or 1040EZ), use Form 4506 to request the IRS to send a copy of your return to a third party.

If you're asked only for IRS verification of your income, use Form 4506-T or Form 4506T-EZ. These forms request the IRS to send a copy of that information to a third party.

Types of Financial Aid

Scholarships – Scholarships include amounts paid for: If you're a degree-seeking student, you don't report scholarship money spent for qualified education expenses at a qualified educational institution.

• Academic abilities
• Athletic abilities
• Musical abilities
• Other abilities

For degree candidates, only the portion of a scholarship used to pay for amounts other than tuition and required fees is taxable. Required fees are items required for all students in a particular program.

Scholarship amounts used for these items are taxable:

• Room and board
• Travel
• Research
• Clerical help
• Equipment

Grants – These grants are treated like scholarships and are tax-free if used to pay for qualifying expenses:

• Pell Grants
• Supplemental Educational Opportunity Grants
• Grants to states for state student incentives

Money from the above grants used for travel to and from school is taxable. Payments are tax-free for these items received under Department of Veterans Affairs (VA) administered laws:

• Education
• Training
• Subsistence

Fulbright Grants – These grants might be awarded for study, research, or teaching abroad. They´re usually treated like any other scholarships in figuring how much of the grant is tax-free. Ex: If you receive a Fulbright Grant for lecturing or teaching, it's payment for services and is taxable.

Reporting Financial Aid

Don't report nontaxable scholarship amounts on your return. Taxable amounts are included with wages –even if the scholarship amounts aren't shown on a Form W-2.

Form 1040EZ – Include the taxable amount on line 1. If the income wasn´t reported on Form W-2, print ''SCH''and the taxable amount in the space to the left of line 1.

Form 1040 or 1040A –Include the taxable amount on line 7. If the income wasn´t reported on Form W-2, print "SCH" and the taxable amount on the dotted line next to line 7.

Higher Education Benefits

The government provides you with 3 types of benefits while you're attending a higher-learning institution:

• For 2009–2012, you can claim the American Opportunity Credit for the first 4 years of college. The student must be enrolled in at least 1 / 2 of a full-time load in a degree program.
• You can claim the Lifetime Learning Credit for any number of years. This credit applies to the family as a whole, not on a per student basis. These aren´t factors for eligibility:
• Number of hours a student is enrolled
• If a student is enrolled in a degree program
• You can claim the tuition and fees deduction to reduce your taxable income by up to **TuitionAndFeesDeduction** ($4,000). The deduction is based on the amount of higher-education expenses you incur. These aren´t factors for eligibility:
• Number of hours a student is enrolled
• If a student is enrolled in a degree program

State Taxes

Attending school in a state that´s not your home state isn't considered a permanent address change. If you're attending college out-of-state, you'll still file taxes with your home state.

However, you'll file a return in both states if either of these applies:

• You earn income in the state where you attend college
• You´re considered to be a statutory resident of the state where you attend college.