The grantor of a scholarship or fellowship does not withhold tax
unless the grant represents payment for services. Grants representing
payment for services are wages for withholding purposes. The grantor
must report them on a Form W-2.
You may have to pay estimated tax if the grantor of a scholarship
or fellowship does not withhold tax or withholds insufficient tax on
the taxable part of your scholarship or fellowship grant.
Your estimated tax is the total of your expected tax for the year
minus your expected withholding and credits.
Use Form 1040-ES, Estimated Tax for Individuals,
to figure and pay estimated tax.
Who should make estimated tax payments?
Generally, you must make estimated tax payments if you expect to
owe at least $1,000 in tax after subtracting your withholding and
credits, and you expect your withholding and credits to be less than
the smaller of:
- 90% of the total tax for the year, or
- 100% of the total tax shown on your preceding year's tax
return. You must have filed a return for the preceding tax year that
covers all 12 months.
When to pay estimated tax.
For estimated tax purposes, the year is divided into four payment
periods. The payment due dates are April 15, June 15, September 15,
and January 15. If you have income subject to estimated tax during the
first payment period, you must make your first payment by the due date
for the first payment period. You can pay all your estimated tax at
that time, or you can pay it in four installments. If any of the due
dates fall on a Saturday, Sunday, or legal holiday, the due date is
the following business day.
Penalty.
If you do not pay enough of your estimated tax in each payment
period, you may have to pay a penalty. You will not have to pay a
penalty if you had no tax liability last year and you were a U.S.
citizen or resident for the whole year. For this rule to apply, your
prior tax year must have been a tax year of 12 months.
For more information, see chapter 4 of Publication 505.
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