Ep. 75 Taxes and Scholarships, Kappa League (#WhyKappasMentor)& Charlie’s Journey

Taxes and ScholarshipsThis 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.

Related links:

Kappa Alpha Psi Fraternity, Inc. – National Kappa League Program @NtlKappaLeague


Ep. 32 How to Deal with the High Cost of College

Ep. 32 How to Deal with the High Cost of College

How to Deal with the High Cost of CollegeIn today’s episode, we interview Brad Baldridge, and talk about money strategies to deal with the high cost of college. Mr. Baldridge is a late-stage college planning specialist and podcast host (Taming the High Cost of College). He helps parents of high school students plan and pay for college using strategies such as merit aid, need based aid, tax planning, savings and investing for college, negotiating with colleges, scholarships and loans.

He works with many parents/families with high incomes that may not qualify for need based aid.  Here are some tips:

  1. Gift assets to your children to pay for college
  2. Utilize college savings plans for the tax benefits
  3. Shift more income into retirement plans for better tax planning

Mr. Baldridge talks about how to pay for the high cost of college utilizing tax scholarships.  That means paying for college tax efficiently.  For example, shift income to students if you own a business or rental property by hiring your student to do yard work or as a part-time employee.  This would create an expenses that is deductible on your taxes.  Another example would be to take advantage of the tax credit available to families with up to $2500 in education expenses per child.  Contact the IRS.gov website for information about tax credits for education expenses.

The last question I ask deals with the current political climate in which both of the Democratic candidates talk about their plan about dealing with the high cost of college:

Bernie Sanders’ Plan @BernieSanders

Hillary Clinton’s Plan @HillaryClinton

Links mentioned in this episode:

Website – Tamingthehighcostofcollege.com

Scholarship Guide for Busy Parents

Contact Brad