Certain scholarships and fellowship grants are tax-free if you meet the following requirements:
- You are a degree student at an educational institution that has a faculty and student body on campus AND
- You use the scholarship/grant to pay for education supplies/tuition
When are scholarships/grants taxable?
You must include in income amounts you receive for:
- Room and board
- Optional equipment (not required for curriculum)
- Wages earned for teaching, research, or other services (conditions of receiving grant). However, you don't need to include in gross income any amounts you receive for services that are required by the National Health Service Corps Scholarship Program, the Armed Forces Health Professions Scholarship and Financial Assistance Program, or a comprehensive student work-learning-service program.
If you had excess scholarship or grant income that was not used for education expenses, you will need to report the portion that is taxable on your return.
Please keep in mind that scholarship and grant income should be reported for taxpayer or spouse only. If you are a person claiming an education credit for a dependent, and that dependent has taxable scholarship income, they must claim that on their own tax return.
How do I enter my taxable scholarship/grant?
If your scholarship/grant is taxable, it will be entered by going to:
- Less Common Income
- Other Compensation
- Scholarships and Grants