Section A • Page 8
The University Daily Kansan
Wednesday, February 28, 2001
MAKE YOUR OWN
SCHEDULE!
SCHEDULE!
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Tax Guide
Financial aid considered taxable income
Rv Sara Bouska
By Sara Bouska
Special to the Kansan
There may be such a thing as free money, but even free money is taxable.
Types of financial aid that do not have to be repaid, like scholarships and grants, often make it possible for University of Kansas students to pay for college.
However, when tax season rolls around, the aid is subjected to the same taxes as a student's regular income earned from work if it exceeds tuition and required fees.
Michele Kessler, associate director of Legal Services for Students, said there was really no distinction between the two types of income.
"There's no line on the tax return to report scholarships, you just add it into your income line," she said.
Kessler also said there was no distinction between scholarships and grants, even though grants came from the government and usually were based on need.
"They use the generic term scholarship for
anything that is free money to you and doesn't have to be paid back," she said.
Until 1987, scholarship money was not susceptible to taxes. Kessler said, and it wasn't until the last few years that the University
started keeping track.
The result of the change in the law may be a student receiving scholarships or other aid, need-based or not, could wind up owing the government money in April.
There is some relief for students, or the party claiming the student as a dependent, in the Tax Relief Act of 1997. Part of this act
establishes education credits the student, or the person claiming the student, may receive for paying tuition.
According to IRS publication 970, which outlines the education credits, anyone who pays tuition out of pocket can be eligible for a tax credit. Part of the specifications to receive the credit is the tuition must be paid by the individual and not covered by scholarships, grants or a third-party sponsorship.
The University sends form 1098T to students who receive
aid. The form lists the tuition and fees paid for each semester on one line and the amount of scholarship or grant money the University owes the student on the next line. According to Kessler, if line two is bigger than line one, the difference is taxable
income. The third line of form 1098T i loans, which is handled differently.
"Loans you don't have to worry about for taxes because they are money you have to pay back, so it's not taxable income," Kessler said.
She also pointed out that after graduation when interest begins to accumulate on student loans, it is tax deductible.
The last line, labeled sponsorship, refers to any third party paying tuition such as an employer, a department, or another country for foreign exchange students.
She also said to keep in mind books were considered required expenses, and were tax deductible.
Kessler said these sponsorships prevented students from claiming tax credits because tuition was not paid out of pocket.
Any student who receives ad but has not received form 1098t should contact General Accounting, 20 Carruth O'Leary, 864-3322.
- Edited by Jenni Valadez
Kansas offers online, phone filing of state taxes
By Emily Callaghan
By Emily Callaghan Special to the Kansan
Tax season brings more options than which form to fill out — individuals can opt to file Kansas state taxes online or on the phone.
To file taxes online, you must have filed a Kansas individual income tax return last year. You must also have your personal PIN number from your mailing label or last year's refund or balance due amount. The IBM compatible computer you use must be up to speed, too. If you don't have a modem equipped with Windows 95 or newer, PCFile is not an option.
Telefile and PCFile are designed to be faster and easier than mailing standard tax forms. However, there are restrictions on both.
must have received a Kansas tax form, complete with your correct mailing information. You can file with a touch-tone phone.
To meet Telefile's requirements, you must have filed Kansas individual income taxes last year. You also
Elizabeth Bouwkamp, Overland Park senior, met the requirements to file from her PC but chose not to.
"Telefile is so much easier," she said.
Bouwkamp said after more than an hour of trying to file from her PC, she gave up.
"It was frustrating and annoying," she said. "It took forever to download the form."
After she entered all of her information, the page malfunctioned and did not allow her to submit her form.
"Telefile took 10 minutes, and there was a voice prompting you to enter the appropriate information," she said.
Her refund was deposited directly
TO FILE ONLINE
Kansas taxes: www.weibtax.org
Federal taxes: www.irs.gov, click on "online services" at the bottom of the screen
into her checking account seven days after she filed. She said she was initially attracted to PCFile because she had heard refunds were issued within two days.
She also said filing by phone was more user-friendly, which is more important than a faster refund.
Dan Truesdale, Lawrence senior, filed his taxes for the first time this year. He said he was surprised how simple filing by Telefile was.
"It was easier than filing out the application for financial aid," he said.
Edited by Amanda Hay
LOOKING FOR A BRIGHT FUTURE?
CONSIDER A KU MBA.
Now is the time to plan for next fall. Here are five of 25 reasons to consider a KU MBA:
6. It is designed for students with undergraduate degrees in liberal arts, engineering, journalism computer science, and other nonbusiness fields.
9. The average starting salary for 2000 KU MBA grads was $57,690.
20. You can choose study-abroad programs including Italy, France, and Mexico.
13. College algebra is the only math prerequisite.
25. The career path for KU MBA's is wide open. Choose private industry, the public sector, or entrepreneurship.
Want to know the other 20 reasons?
Contact MBA office in 206 Summerfield Hall or call 864-3050 ext.4
LH KU MEV www.bSchoolgRays.edu
The University Of Kansas School of Business
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