Why do I need to file taxes on a free tuition benefit? I received a 1099-MISC & it marks the tuition benefit as "other income." I've never seen or worked for this money.

[oh_llama]

My father used to work for the university before he passed away, but was classified as retired prior to his passing. That is why I still receive the defendant tuition benefit. I am not sure why I have to pay taxes on it though, if I don't work for the money and never actually see it or have a say on how it's used.

[DavidS127]

Whether a tuition benefit is taxable depends on several factors.

According to IRS Publication 970 at this link, you may not have to pay tax on a "Qualified Tuition Reduction" If you are allowed to study tuition-free or for a reduced rate.  You don't have to include a qualified tuition reduction in your income.  A tuition reduction is qualified only if you receive it from, and use it at, an eligible educational institution. The rules for determining if a tuition reduction is qualified, and therefore tax free, are different if the education provided is below the graduate level or is graduate education.

If you receive a tuition reduction for education below the graduate level (including primary, secondary, or high school), it is a qualified tuition reduction, and therefore tax free, only if your relationship to the educational institution providing the benefit is described below.

1. You are an employee of the eligible educational institution.

2. You were an employee of the eligible educational institution, but you retired or left on disability.

3. You are a widow or widower of an individual who died while an employee of the eligible educational institution or who retired or left on disability.

4. You are the dependent child or spouse of an individual described in (1) through (3) above.

For purposes of the qualified tuition reduction, a child is a dependent child if the child is under age 25 and both parents have died.

A tuition reduction you receive for graduate education is qualified, and therefore tax free, if both of the following requirements are met.

• It is provided by an eligible educational institution.

• You are a graduate student who performs teaching or research activities for the educational institution.

You must include in income any other tuition reductions for graduate education that you receive.

[oh_llama]

I am at a graduate level. I receive the free tuition benefit from the university, because my now deceased father was classified as retired from the university. That's why I receive the 1099-MISC and not him. Does working on a masters research thesis count as "research activities for the educational institution," because I do not teach.

[DavidS127]

If you are not receiving a W-2 from the university, you are not performing "research activities for the educational institution".

If the tuition reduction is taxable under the rules, enter the 1099-MISC in the section at Federal>>Income>>Other Common Income>>Form 1099-MISC, or use the Search icon on the top row to enter 1099-MISC and click the "Jump to 1099-misc" link.