Are Trade Act paid Tuition and School expenses taxable?

[jnjpatoine]

I was laid off and qualified for Trade Act. I had less than a year of school left to finish my BS so I went back to school. I received my unemployment earnings (1099-G) and a Tuition Statement (1098-T), but nothing else. I paid nothing for finishing my degree through Trade Act, it all came from the government. Are the funds paid to the school on my behalf taxable?  Thank you!

[Hal_Al]

Q. Are the funds paid to the school on my behalf taxable? 

A. No.

But you cannot claim a tuition credit, based on the tuition paid by that tax free assistance. 

[jnjpatoine]

Thank you!!

[ThomasM125]

No, the funds paid to the school are not taxable to the extent they are for qualifying education expenses. They should be listed in box 5 on your form 1098-T Tuition Statement. You would only pay tax on your scholarship income if the amount in box 5 was more than your education expenses listed in box 1 of your form 1098-T.