Top Law Schools

Do we have to pay income tax on student loans?

No.

No. But you will be paying the money back with post-tax money at likely higher than your current tax rate.

Student loans are not income, because you have to pay the money back, wages are income because you keep the money.

..

Corsair wrote:

Fourttier wrote:Student loans are not income, because you have to pay the money back, wages are income because you keep the money.

Note that grants are income.

Only if they are used for living expenses. If they go toward tuition, etc, they are not considered taxable income (at least they didn't when I was in college).

Corsair wrote:

Fourttier wrote:Student loans are not income, because you have to pay the money back, wages are income because you keep the money.

Note that grants are income.

I put all my tax books in storage on 4/17, but I think grant money used for books and supplies are non-taxable. If the grant money is used for room and board or other living expenses, then it is taxable.

For tax purposes, is there any difference between a grant and a scholarship?

If i'm living off student loans can i collect food stamps?

This won't apply for you 1L year 'cause you can't have a job, but federal work-study awards are taxable income as well.

Gift aid (whether grant or scholarship) which is not used to pay tuition or books/supplies is considered taxable income. Since most people's packages do not include grants/scholarships beyond full tuition, this won't catch many people. But if you are getting a stipend to live on, then it will be considered taxable income, and you will be expected to report it to the IRS (the school generally will not do this) and pay any taxes on it.

Scholarships and grants are taxable if they are used for living expenses. If used for tuition/school fees then they are not taxable. I am not sure about books.

I do not think you can collect food stamps if living off loans, but I haven't tried it.

No.

Also, you can deduct qualified tuition payments from your annual income while attending school. http://www.irs.gov/publications/p970/index.html

What's more, when you get out of school any payments of student loan interest are deductible. http://www.irs.gov/taxtopics/tc456.html Once interest is capitalized it can no longer be claimed, so at a bare minimum make your interest payments. You do not have to itemize deductions to claim student loan interest payments. Your lender(s) will send out a 1098 (or have it available online as a 1098-E) each year.

Student loans are not considered income. Grant aid is considered income but if you use it to pay tuition/qualified education expenses you can deduct it. Student loan interest you pay back after school is deducatable but only to a certain point AND I believe the IRS phases out the deductable amount based on your income. If you make biglaw money after school, more than likely you will not be able to deduct your student loan interest. I think this makes sense when I read it back.

I don't think it has been said yet, but grants and scholarships are only considered income if used for things other than tuition or books.

Thanks, everybody...very helpfull.

I changed my paycheck deductions so that I will be having almost taxes withheld since I only plan to work till July, so I won't make very much money, will deduct my tuition from fall semester, and don't expect to pay very much federal tax.