Tax Info on Scholarships, Fellowship Grants and Other Grants

Scholarships, Fellowship Grants, and Other Grants
A scholarship is generally an amount paid or allowed to a student at an educational institution for the purpose of study. A fellowship grant is generally an amount paid or allowed to an individual for the purpose of study or research. Other types of grants include need-based grants (such as Pell Grants) and Fulbright grants.

Tax-FreeIf you receive a scholarship, a fellowship grant, or other grant, all or part of the amounts you receive may be tax-free. Scholarships, fellowship grants, and other grants are tax-free if you meet the following conditions:

• You are a candidate for a degree at an educational institution that maintains a regular faculty and curriculum and normally has a regularly enrolled body of students in attendance at the place where it carries on its educational activities; and
• The amounts you receive are used to pay for tuition and fees required for enrollment or attendance at the educational institution, or for fees, books, supplies, and equipment required for courses at the educational institution.

TaxableYou must include in gross income:

• Amounts used for incidental expenses, such as room and board, travel, and optional equipment.
• Amounts received as payments for teaching, research, or other services required as a condition for receiving the scholarship or fellowship grant. However, you do not need to include in gross income any amounts you receive for services that are required by the National Health Service Corps Scholarship Program or the Armed Forces Health Professions Scholarship and Financial Assistance Program.

How to Report – Generally, you report any portion of a scholarship, a fellowship grant, or other grant that you must include in gross income as follows:

• If filing Form 1040 (PDF), Form 1040A (PDF), or Form 1040EZ (PDF), include the taxable amount in the total on the “Wages, salaries, tips” line of your tax return. In addition, if the taxable amount was not reported on Form W-2 (PDF), enter “SCH” with the taxable amount in the space to the left of the “Wages, salaries, tips” line. If filing Form 1040NR (PDF) or Form 1040NR-EZ (PDF), report the taxable amount on the “Scholarship and fellowship grants” line.

Estimated Tax Payments – If any part of your scholarship or fellowship grant is taxable, you may have to make estimated tax payments. Refer to Publication 505, Tax Withholding and Estimated Tax, for additional information on estimated tax.

Additional InformationFor more information, refer to Publication 970, Tax Benefits for Education.