Financial Aid and Tax Issues
Taxable Financial Aid
Current federal tax laws have made some financial aid taxable income. Financial aid received (other than loans) above the cost of tuition, fees, and books is considered taxable income. You should contact the IRS or a tax preparer for additional information.
Educational Income Tax Credits
There are two educational income tax credits that can reduce your or your family’s federal taxes. They are based on your university tuition and fee charges. The American Opportunity Tax Credit can be claimed during the first two years of college, up to a maximum of $1,650 per year. The Lifetime Learning tax credit is available for any level of post-secondary study, up to a current maximum of $2,000 per year. Note that only one type of credit (American Opportunity or Lifetime Learning) may be claimed for a student in a given year. For more information about tax credits, you can visit the IRS web site at www.irs.gov.