Back when I was living in the US, there was a rule that if your employment required you to take courses, then your tuition payments were deductible as an employment expense. If this rule is still in effect, then the graduate student who gets a tuition waiver and this is added to his income, then he can deduct it since clearly going to school is automatically a requirement to continued employment as a research assistant.
Have the rules changed or am I missing something?
Alley Dweller did all the leg work on that question and explains it here.
The current law doesn’t necessarily provide a tax deduction, as the IRS explains here.
(Emphasis added)
That leaves a big question. If I’m a graduate teaching/research assistant, is the Ph.D that I’m working toward “a new trade or business”?
The current law cuts through that issue by simply declaring that tuition waivers aren’t taxable income, period. The proposed law would repeal that.
Kunilou, reading OP I came up with the same question, out of what even I think is pleasant but no-win reasoning.
FWIW, I received a full tuition and board as well as a sizable annual income (for a student certainly) for my entire graduate career, pre-MA to Ph.D. (Thank you US taxpayers and the Dept. of Education!)
The stipend was taxed.
I might mention that my DIL received a full scholarship for her last two years of med school from the public health service in return for a commitment to give two years of public service. It was considered a prepayment for the public health service employment and every cent of that scholarship was fully taxed.
But my question is answered.
An interesting article that suggests at the very least it’s benign neglect, aimed at the fact that college grads tend to vote Democratic and also because the states need the money for health care - plus the bill effectively raises the tax rate for blue states and makes it harder for them to raise taxes, so services like universities and health care will suffer more…