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Stanfield, Thomas & Associates
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Tax Rules for Scholarships, Grants and Fellowships - Did You Know?![]()
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Common questions about education expenses relate to whether scholarships, fellowships and grants constitute taxable income. These awards are generally tax-exempt when received by a degree candidate at an eligible educational institution and used for qualified education expenses, including tuition, required enrollment fees, and required course-related books, supplies and equipment.![]()
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However, taxes may apply to funds used for nonqualified expenses like housing, food, travel and optional equipment. Fellowships that carry a work requirement, such as serving as a teaching assistant, are generally taxable compensation to the extent they represent payment for teaching, research or other required services, subject to limited exceptions.![]()
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The educational institution or scholarship provider should provide you with detailed information about the potential taxability of funds. By reviewing that information with you, a tax professional can help you maximize both tax benefits and peace of mind.
Quarterly Estimated Tax Payments - Reminder![]()
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If you are making quarterly estimated tax payments to the IRS, the due date for the June 1 - August 31, 2026 payment period is coming up next week on Tuesday, September 15, 2026.![]()
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For payments made using IRS Direct Pay, you can make payments until 11:45 p.m. ET on the due date. Debit and credit card payments may also be made online through an IRS-approved payment processor.
Educator Classroom Expense Deduction – Did You Know?![]()
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Eligible K-12 teachers, instructors, counselors, principals and aides who pay for classroom supplies out of pocket may deduct up to $350 of qualifying expenses per year. Married couples filing jointly who are both eligible educators may deduct up to $350 each, for a combined maximum of $700.![]()
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You do not need to itemize deductions to claim this deduction. Be sure to keep receipts and other records for any classroom expenses you plan to deduct.
Major Higher Education Tax Credits Now Require Valid SSN – Did You Know?![]()
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The American Opportunity Tax Credit (AOTC) and Lifetime Learning Credit (LLC) help many Americans pay for higher education. For eligible students pursuing a degree or other recognized credential, the AOTC can cover up to $2,500 in tuition, required school fees and certain course materials per year. Meanwhile, the LLC can offset up to $2,000 per tax return for qualified education expenses for eligible students taking higher education courses for a variety of reasons.![]()
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Beginning with tax year 2026, the taxpayer claiming either the AOTC or LLC (and spouse, if filing jointly) must have a Social Security number (SSN) valid for work in the United States that was issued before the due date of the tax return, including extensions. If the eligible student is not the person claiming the credit (for example, if the student is that person's dependent or spouse), then the student must also have a valid SSN issued by that deadline. Other qualification requirements, such as income limits, remain in effect. A tax professional can help you determine whether the higher education expenses you pay for yourself, your spouse or a dependent qualify for a tax benefit.
Seasonal Employers - Did You Know?![]()
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Summer is a peak time for many businesses to hire seasonal employees. In general, the same federal tax rules apply to these workers as to permanent staff. Employers typically must withhold federal income tax and FICA (Social Security and Medicare) taxes and pay the employer share of FICA. Employers subject to FUTA must also pay federal unemployment tax on taxable wages.![]()
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Seasonal employers often must file Form 941 (Employer's Quarterly Federal Tax Return) for quarters in which they pay wages. However, they generally do not need to file for quarters in which they paid no wages and have no employment tax liability. If this applies, check the "Seasonal Employer" box on every Form 941 you file.![]()
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Employment taxes generally must be deposited monthly or semiweekly, based on the applicable lookback period. FUTA follows separate deposit rules and generally must be deposited when accumulated FUTA tax exceeds $500 for a quarter. Federal tax deposits must be made electronically, including through EFTPS.