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Someone may have already asked this, but I'm going to again. Sorry!

I received a study grant from my MBA program, which provides me with approx. $4700 a semester of tuition waivers. Since i'm a ful time student, I only work part time, which means I don't have much income. I guess my question has 2 parts:

1. is the tuition remission taxable?

2. If so, what can i do to avoid taking a huge hit from Uncle Sam in April that I can in no way afford?

Thanks!
Sonja
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<<I received a study grant from my MBA program, which provides me with approx. $4700 a semester of tuition waivers. Since i'm a ful time student, I only work part time, which means I don't have much income. I guess my question has 2 parts:

1. is the tuition remission taxable?

2. If so, what can i do to avoid taking a huge hit from Uncle Sam in April that I can in no way afford?>>

Check with your college financial folks for a more clearer understanding of the issues. There are a number of "incentives" that education institutions can offer, and some of them are pretty tricky.

Generally speaking, gross income does not include any
amount received as a qualified scholarship by an individual who is a candidate for a degree at a qualified educational organization.

A qualified scholarship is any amount received by an individual as a scholarship or fellowship grant to the extent it was used for qualified tuition and related expenses. The terms of the scholarship or fellowship grant need not expressly require that the amounts received be used for tuition and related expenses.

However, to the extent that the terms of the grant
specify that any portion of the grant cannot be used for tuition and related expenses or designate any portion of the grant for purposes other than tuition and related expenses (such as for room and board or for a meal allowance), such amounts are not amounts received as a qualified scholarship.

On the other hand, the scholarship exclusion does NOT apply to any amounts received as a scholarship that represent payments for teaching, research or other
services required as a condition to receiving the scholarship, regardless of whether all candidates for the degree are required to perform such services. This rule applies both to cash scholarships and tuition
reductions.

A scholarship or fellowship grant represents payment for services when the recipient is required to perform services in return for the granting of the scholarship or fellowship. A requirement that the recipient pursue
studies, research, or other activities primarily for the benefit of the grantor is treated as a requirement to perform services, but a requirement that a recipient furnish periodic reports to the grantor for the purpose of keeping the grantor informed as to the general progress of an individual is not. A scholarship or fellowship grant conditioned upon
either past, present, or future teaching, research, or other services by the recipient represents payment for services.

So, the general rules are about the best that I can give you. Hopefully you can fit your situation into the general rules, get a feel for the issues, and then check with your financial aid or scholarship folks at your college to get the final answer.

TMF Taxes
Roy
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Um, why do I think the esteemed (by me, and most) TMFTaxes was copying out of a manual in #41340? Here's the way I understand it. Tuition waivers are not taxable. There was a move in Congress to change that, but it failed. If now in addition you get money, the extra is taxable. Back, 30 years ago, when I was a graduate student, there was a difference between teaching assistantships and fellowships. TA's had to pay taxes, because they had to work. Fellows didn't (Yay!) because they didn't.

But it's different now, as Roy indicates. Now everybody pays on the extra. Actually it's not the money that matters for graduate students, but the time. You still want the fellowship since you don't have responsibilities, except to write your thesis.

Careful readers will notice that Roy and I are not, I think, disagreeing.

Dobbin, sotto voce: Ouch again
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<pause> <ponder. Okay, I think I got all that. So, basically, since I have to work 10 hours a week for a professor as part of my grant, that means it's taxable?

Thanks!

Sonja
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<<Um, why do I think the esteemed (by me, and most) TMFTaxes was copying out of a manual in #41340?>>

Well...likely because he DID do a "cut and paste" job in order to get some of the basics out to the reader.

<< Here's the way I understand it. Tuition waivers are not taxable. There was a move in Congress to change that, but it failed.>>

And I agree. But I wasn't sure if the original question had to do with a "waiver" as we both understand it. The person asking the question used the term "remission"...a term that I'm not familar with. So I thought I'd just provide the general rules for the benefit of the reader. Hence, the cut and paste.

<< If now in addition you get money, the extra is taxable. Back, 30 years ago, when I was a graduate student, there was a difference between teaching assistantships and fellowships. TA's had to pay taxes, because they had to work. Fellows didn't (Yay!) because they didn't.>>

Ah yes...the good old days. And right you are, by the way.

<<But it's different now, as Roy indicates. Now everybody pays on the extra. Actually it's not the money that matters for graduate students, but the time. You still want the fellowship since you don't have responsibilities, except to write your thesis.>>

Again...right you are.

<<Careful readers will notice that Roy and I are not, I think, disagreeing.>>

I don't think that we disagree at all. You just put it much better than I possibly could. Thanks for the help.

TMF Taxes
Roy

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<<<pause> <ponder. Okay, I think I got all that. So, basically, since I have to work 10 hours a week for a professor as part of my grant, that means it's taxable?>>

Very likely, yes. But again, check with your educational institution and see what they have to say about the taxability issues. Only a PORTION of the benefit might be subject to tax. Get the information from the horse's mouth.

TMF Taxes
Roy

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Get the information from the horse's mouth.

Would that be our dear, departed Dobbin? <g>

TMF ExRO
Phil Marti
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"Very likely, yes. But again, check with your educational institution and see what they have to
say about the taxability issues. Only a PORTION of the benefit might be subject to tax. Get
the information from the horse's mouth."

Okie dokie:-) Thanks for the help!
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