The federal government provides several ways in which your income tax burden can be reduced when you or your parents pay for a college education. Detailed information regarding these benefits can be found on-line at the IRS website or by calling 800-TAX-1040. You should request publication 970.
In addition to providing tax breaks some forms of financial aid are considered taxable income. Federal Work-Study earnings are just like income from any job. They are taxable income. Grants and scholarships can also be taxable income. You should save all your receipts for tuition, fees, books and supplies and consult a tax advisor to determine your tax liability.