Tax question

[lynx]

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I know it's probably a silly question but I still don't know the answer - do we pay taxes from the loans we get? Are loans considered an income?

 

[mpp]

Actually, you are not supposed to pay taxes on student loans...they are not considered income. Even scholarship money is not considered income as long as it is used to pay for tuition & fees plus expenses required for courses such as books, supplies & equipment. Scholarship money used for room and board or any other expenses but those listed is considered income and is taxable as income.

 

[proman]

You don't pay taxes on any type of loan. Anytime that you owe interest with the expectation of repayment, it's not income. Otherwise, think about that $500,000 mortgage!

 

[lynx]

Scholarship money used for room and board or any other expenses but those listed is considered income and is taxable as income.

How about loans? If I'm using loans for living expenses,etc are they considered income? I still have to pay interest on them, right? And taxes?

 

[Mutterkuchen]

You cannot be taxed on loans. They are not income. You have to pay them back, which is why you should take as few as possible.

 

[freedyx3]

What about reimbursed tuition money? Because my father's company will reimburse part of my tuition, will I or my dad have to pay tax on that reimbursed money?

 

[Mutterkuchen]

You'll have to check with a tax person, but I think that you have to pay taxes. If the company (or your parents) pay your bill directly to the school, you should not have a tax liability. But reimbersement counts as income.

It's true in the military, too. The HPSPs are tax free (tuition) but the FAP and loan repayment programs are taxable.

 

[mpp]

If the money you get goes to paying tuition and fees directly (and nothing else like rent or food) then it is non-taxable.