This episode is a mashup of current activities for The College Money Maze. We started the weekend off by participating in the Kappa League Conference, sponsored by Kappa Alpha Psi Fraternity, Inc. (bear with us as we debrief our experience giving a presentation to 250 young African-American young men). The Kappa League is the mentor program (#WhyKappasMentor) sponsored by this fraternity and this was their regional conference of all the individual mentor programs from several states.
Students are able to gain valuable experience in community service, opportunities for leadership and are able to bond with others similarly situated. Most Minority Greek Letter Organizations (Pan-Hell) have youth auxiliary (for girls as well) that students can join and participate in.
We then get into the main topic which is about the relationship between taxes and scholarships, meaning whether or not you should be claiming scholarship funds on your tax return. Many parents are probably not aware of how they can be affected by taxes and scholarships when they apply for these awards or receive financial aid from schools. We dive into this topic and explain the difference between the educational deductions and credits that the IRS allows on an individuals tax return.
In summary, the portion of your child’s scholarship that covers tuition, fees and those expenses required for the courses (i.e. books, supplies and equipment) are not taxable. Other costs (room & board, travel etc…) if included in the scholarship ARE TAXABLE and must be reported. The institution will likely send you a statement that details the costs.
WE ARE NOT TAX PROFESSIONALS. Refer to IRS Publication #970 for tax benefits for education, FORM 8917 and the IRS website for complete information.
We end the podcast talking about Charlie Lovett and what is the plan or roadmap as he completes the second half of his junior year in high school. They have some decisions to make as a family (I am sure many of you can relate) if they are going to pursue merit aid, football scholarship or tennis scholarship monies.