Grants, Scholarships, Student Loans, Work Study
This is archived information that pertains only to the 2002 Tax Year. If you
are looking for information for the current tax year, go to the Tax Prep Help Area.
I received an academic scholarship that is designated to be used for tuition and books. Is this taxable?
Qualified scholarships and fellowships are treated as tax-free amounts if all of the following conditions are met: - You are a candidate for a degree at an educational institution,
- Amounts you receive as a scholarship or fellowship are used for tuition and fees required for enrollment or attendance at the educational institution, or for books, supplies, and equipment required for courses of instruction, and
- The amounts received are not a payment for your services.
For additional information on Scholarship and Fellowship Grants, refer to Tax Topic 421, and Publication 520 (PDF), Scholarships and Fellowships.
References: Can I exclude any scholarship or grant from being taxed?
If you received a scholarship or fellowship, all or part of it may be taxable, even if you did not receive a Form W-2. Generally, the entire amount is taxable if you are not a candidate for a degree.
If you are a candidate for a degree, you generally can exclude from income that part of the grant used for: - Tuition and fees required for enrollment or attendance, or
- Fees, books, supplies, and equipment required for your courses.
Taxable scholarships are reported on line 7 of Form 1040 (PDF) or Form 1040A (PDF) or line 1 of Form 1040EZ (PDF). If you did not receive a Form W-2, please write "SCH" and the taxable amount to the left of the line.
References: Can I exclude from taxable income the room and board portion of a grant or fellowship?
No, you cannot exclude from income any part of the grant used for room and board. A scholarship generally is an amount paid for the benefit of a student at an educational institution to aid in the pursuit of studies. The student may be in either a graduate or an undergraduate program. A fellowship grant generally is an amount paid for the benefit of an individual to aid in the pursuit of study or research. Report this amount on line 7 Form 1040 (PDF) or Form 1040A (PDF) or line 1 of 1040EZ. If you did not receive a Form W-2, please write "SCH" and the dollar amount to the left of the line.
References: Do I need to report income made as a work study student at my college?
If you are enrolled in a state or local work-training program under the Economic Opportunity Act of 1964, payments you receive as compensation for services are wages and includable in gross income. Report these payments as wages on line 7 of Form 1040 (PDF) or Form 1040A (PDF) or line 1 of Form 1040EZ (PDF).
References: 7.4 Child Care Credit/Other Credits: Hope & Life Time Learning Educational Credits If I pay college tuition and fees with a scholarship, can I claim an education credit on Form 8863 for those payments?
No. You cannot claim a credit for the amount of higher education expenses paid for by tax-free scholarships.
References: If the amount of qualified tuition and fees I pay is greater than the amount of my scholarship, should I fill out Form 8863? If I cannot use Form 8863 because I received a scholarship, what can I do?
You must reduce the qualified expenses by the amount of any tax-free educational assistance. Do not reduce the qualified expenses by amounts paid with the student's earnings, loans, gifts, inheritances, and personal savings. Also, do not reduce the qualified expenses by any scholarship reported as income on the student's return or any scholarship which, by its terms, cannot be applied to qualified tuition and related expenses.
References: 13.6 Aliens and U.S. Citizens Living Abroad: Nonresident Alien - Students I am a student from the People's Republic of China currently studying in the United States. How does the income tax treaty between the U.S. and China apply, especially for students with scholarships and fellowships?
If you are in the United States solely for the purpose of your education, training, or obtaining special technical experience, you may be able to exclude from your income grants or awards that you receive from a government, scientific, educational, or other tax-exempt organization. You also may be able to exclude payments that you receive from abroad for the purpose of your maintenance, education, study, research, or training and up to $5,000 of income that you receive from personal services performed in the United States. Please refer to Publication 519 (PDF), U.S. Tax Guide for Aliens.
References:
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