The gamecock. (Columbia, S.C.) 1908-2006, March 22, 1989, Page 2, Image 2
Tax changes a
By RON BAKER
Slaff writer
There are some changes in the income tax law that USC
? students should be aware of before the April 15 filing
deadline.
S.C. Internal Revenue Service Public Affairs Officer
Mike Quinn said the most important change is that
scholarships, grants and the like are no longer entirely
tax-exempt as thev were last year.
Beginning with 1987, students can no longer deduct
< scholarships that are used for room and board, travel ex[
penses and so on. Only funds used for "academic ex)
penses" are tax-free, said USC Business Administration
* professor Caroline Strobel.
Jack Reece, manager at the Harden Street office of H &
R Block, said that only "tuition fees, books and equipment
required for study" are not taxable under current
law.
Unlike past laws, the 1986 Tax Reform Act allows for
the taxation of scholarships, grants, assistantships and income
from work-study jobs.
Furthermore, Quinn added that only degree candidates
are eligible to exempt any such income.
The only exception to this rule is a little-known clause
that permits students on athletic scholarships a complete
exemption, regardless of how the money is used, Quinn
said.
Reece noted that this is no guarantee for athletes on
scholarships because the law is unchallenged so far, but he
said that'"athletic scholarships will probably continue to
be excluded from income taxes".
Another new change is a law which says that students
can no longer claim themselves as dependents if their
parents are qualified to do so. This only applies to
students under 23 years of age, Reece said.
interest
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ffect students ?
Parents are eligible if their sons or daughters is a fulltime
student and if the parents contribute more than half ^
of the student's income. ^ ^
The issue of exactly what portion of a student's income ^
is taxable is further complicated because of the Tax ?
Reform Act's assertion that students with both earned 0^^C(
and unearned income can claim exemption in the maximum
amount of $500 rather than the standard $3,000 of 4lj
the past.
200C
For example, a student earning $2,500 at an off-campus
job who is also receiving scholarship assistance used for
costs other than academic expenses can only claim to be
tax-exempt from $500 of their total income, which now
includes the scholarship money as well.
Students cannot claim to be exempt from more than the
total amount of their earned income (which includes
wages, tips and other money the student has actually
worked for), and even if a student earns far less than the
$3,000, including unearned income, the deduction cannot
exceed $500.
It is also important to note that these laws only apply to
single students.
Reece said that the biggest problem students seem to
have in filing their tax returns is in not reading the forms
carefully.
"Each line has a message to convey, and students
should be careful to respond appropriately to the requests
for information," he said.
Students are encouraged to use the 1040EZ form, which
is generally the most useful for persons in the financial
situations common to students.
Students with further questions can contact the IRS at
1-800-424-1040.
Students should also be careful to take care of their
taxes before the April 15 filing date.
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itinued from page 1
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He said the wording of the bill is
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"I think some of the members of
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