How to Report Income From Scholarships on Taxes

Are you looking for a way to report income from scholarships, fellowship grants or any other Grants on taxes? We have an easy solution for you to get everything resolved as we show you How to Report Income From Scholarships on Taxes.

Before we lead you through the process, there are some notes for you to take. It will help you know exactly when to report income from scholarship or fellowship grants on taxes and when not to report.

First, we need to understand what exactly a scholarship and fellowship grants are.

SEE ALSO: Does IMG Academy Offer Scholarships: Get Financial Aid

What is a Scholarship / Fellowship Grants

A scholarship is usually a grant or payment given to a student at a school to help them pay for their education. A fellowship grant is usually a sum of money given to a person to help them study or do research. There are also grants based on need, like the Pell Grant, and Fulbright grants.

Please keep in mind that emergency financial aid grants under the Coronavirus Aid, Relief, and Economic Security Act, the COVID Relief Act, and the American Rescue Plan Act of 2021 for unplanned expenses, unmet financial need, or costs related to the COVID-19 pandemic stopping campus operations are not included in your gross income. Refer to Higher Education Emergency Grants Frequently Asked Questions.


Conditions under which scholarships/fellowship grants are free from taxes

If you get a scholarship, fellowship, or other grant, you may not have to pay taxes on all or part of the money you get. If you meet the following conditions, you don’t have to pay taxes on scholarships, fellowship grants, and other grants:

  1. If you are trying to get a degree from a school that has a regular faculty, curriculum, and regular group of students at the place where it carries on its educational activities;
  2. If you can use the money you get to pay for tuition, fees, books, supplies, and equipment at the school.

Part of scholarship/Fellowship Grants which are Taxable

Your gross income must include:

  1. Amounts used for things like room and board, travel, and equipment and other incidental expenses.
  2. Amounts received as payment for teaching, research, or other services needed to get the scholarship or fellowship grant. But you don’t have to count as gross income any payments you get for services 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 (as defined in section 448(e) of the Higher Education Act of 1965) run by a work college.

How to Report Income From Scholarships on Taxes

In general, this is how you report any part of a scholarship, fellowship, or other grant that you have to include in your gross income:

  • If you file Form 1040 or Form 1040-SR, add the taxable part to the total amount you report on the “Wages, salaries, and tips” line of your tax return.
  • If the taxable amount wasn’t reported on Form W-2, write “SCH” and the taxable amount in the space to the left of the “Wages, salaries, tips” line.
  • On the “Scholarships and fellowship grants” line of Form 1040-NR, you should write down the amount that is taxed.

Hope that helps!

If any of the money you get from a scholarship or fellowship is taxed, you may have to pay estimated taxes on the extra money.

For additional information, click here to read Do I Include My Scholarship, Fellowship, or Education Grant as Income on My Tax Return?

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