Qualified and Non-Qualified Student
Just like there are Qualified and Nonqualified college expenses, the IRS and Congress have defined what Qualified and Nonqualified students are.
How important is it to know whether your student is a Qualified or a Nonqualified student? Well, to families that do not have a student in college it is not important.
But to the IRS and families that have a student in college it is very important. The reason it is important is that the IRS and Congress give tax-favored treatment on some scholarships and give tax credit/deduction benefits to certain income level parents for the benefit of the college student.
- For example - if a student is a non-qualified student (according to the IRS) some of the scholarship the student may receive could be taxable to the student in the year the scholarship is issued.
- Another example - if you have a qualified student, the family could qualify for the Hope or Lifetime Learning Tax Credits. However, if the student is a non-qualified student the family could only qualify for the Lifetime Learning Tax Credit.
