Homeschooling for College Credit families often pay tuition or have unique educational situations. I’ve pulled and pasted some highlights from the IRS Publication Tax Benefits for Education to help you with your FAQs. I am not a tax professional! Consult your teen’s college and your accountant regarding your specific situation and your taxes.
High school students are NOT eligible for Federal Financial Aid, Pell Grants, Student Loans, or other funding programs that are reserved for high school graduates in a college degree program. As such, much of Publication 970 won’t apply to your teen who is still in high school.
IRS Publication 970 Tax Benefits for Education
- Question: If my high school teen received a CARES educational benefit/award due to COVID, is this taxable income?
Answer: No. Emergency financial aid grants under the CARES Act for unexpected expenses, unmet financial need, or expenses related to the disruption of campus operations on account of the COVID-19 pandemic, are not includible in your gross income.
2. Question: If my teen is taking and passing a lot of CLEP exams, are they a “college student?”
Answer: No. Taking CLEP exams is an independent activity and has nothing to do with college enrollment. Even when you accumulate a lot of college credit, you would have to officially apply and enroll at a college to qualify as a “college student.”
3. Question: If my high school teen is taking dual enrollment classes at the community college and we are paying tuition, can I claim that on my taxes?
Answer: If you received a 1098-T from the college, then yes. According to the IRS, the 1098-T, Tuition Statement form reports tuition expenses you paid for college tuition that might entitle you to an adjustment to income or a tax credit. An institution must report for any student (even high school student) if the institution considers the student to be in a transaction for which reporting is required is made during the year with respect to the student. As such, if you paid tuition from a qualifying program, you will receive a 1098-T and you can claim that on your taxes.
If you didn’t receive a 1098-T but think your tuition costs should have qualified, contact your tax preparer for guidance.
4. Question: If my teen gets a scholarship, is that taxable income?
Answer: That depends. Most high school students aren’t eligible for scholarships, but if yours received a scholarship and IS enrolled in a degree program then the scholarship probably is NOT taxable income. Contact your teen’s college for clarification on their status- it’s unlikely that your high school student is classified as “enrolled in a degree program” but not impossible, so you’ll need clarity. If your teen received a scholarship but is NOT enrolled in a degree program, you’re probably going to have to claim that as income. (NOTE: Scholarships have very specific IRS rules; if your teen received a scholarship, it’s best to get professional guidance)
5. Question: Can we use our Coverdale Education Savings Account or Qualified Tuition Plan 529 to pay for CLEP, Studycom, Straighterline, Sophia, DSST, or other alternative forms of college credit?
Answer: No. Funds from these types of accounts can only be distributed when the designated beneficiary is enrolled or attending an eligible educational institution. None of the alternative credit providers are “educational institutions” of any type- they are businesses.
6. Question: My teen works for a fast-food restaurant that paid for her to take several management courses at the local university. Will this count as income?
Answer: If you receive educational assistance benefits from your employer, you
can exclude up to $5,250 of those benefits each year. This means your employer shouldn’t include those benefits with your wages, tips, and other compensation shown on your Form W-2, box 1. This also means that you don’t have to include the benefits on your income tax return. This is true for a degree or a non-degree course.