Does this qualify as an education expense?

Forum|Forum|4 years ago
May 29, 2021
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So I am in a PhD program and received my 1098-T. It shows all of the grants I received for the year, but not all of my educational expenses. I received a 2,000 grant that was required to be used gathering data. I had to spend the entire amount at a survey firm to have them get data for me. I don't see how this is different from purchasing a textbook. And because everyone who received this 2,000 grant was required to spend it in this way, I think it qualifies as an educational expense.

Am I off base? All I can find online is that if it is required for my course and required of all students then it counts as a qualified educational expense. I think that once I accepted the grant I entered a new "class" of students, all of whom were required to purchase the 2,000 "textbook." Critically, none of the grant was to compensate me for time spent as a researcher, student, teacher, etc...

Thanks in advance for the help!

Not A Product Question

Hal_Al

Employee

Publication 970 appears to address the issue directly. That $2000 is not tax free.

From Pub 970: A scholarship or fellowship grant is tax free only to the extent:
• It doesn't exceed your qualified education expenses;
• It isn't designated or earmarked for other purposes (such as room and board), and doesn't require (by its terms) that it can't be used for qualified education expenses; and
• It doesn't represent payment for teaching, research, or other services

Qualified education expenses. For purposes of tax-free scholarships and fellowship grants, these are expenses for:
• Tuition and fees required to enroll at or attend an eligible educational institution; and
• Course-related expenses, such as fees, books, supplies, and equipment that are required for the courses
at the eligible educational institution. These items must be required of all students in your course of instruction.
Expenses that don't qualify. Qualified education expenses don't include the cost of:
• Room and board,
• Travel,
• Research,
• Clerical help, or
• Equipment and other expenses that aren't required for enrollment in or attendance at an eligible educational institution.

Furthermore, research expenses are not qualified for the Lifetime Learning Credit (LLC), for which only tuition and fees (not books) are qualified expenses. Books and other "course materials" are only eligible for the American Opportunity credit (AOC) Grad students are not eligible for the AOC.