Scholarship Money And Taxes

 

A scholarship is usually an amount a student receives to help in the pursuit of studies. The student can be either:

  • An undergraduate
  • A graduate student

Scholarship money can be any of these:

  • Tax-free
  • Partially taxable
  • Fully taxable

Tax-free income

If you’re a degree-seeking student, don’t report scholarship money spent:

  • For qualified education expenses
  • At a qualified educational institution

Qualified education expenses are:

  • Tuition
  • Fees required by a qualified educational institution for:
    • Enrollment
    • Attendance
  • Expenses required of all students enrolled in a course, like:
    • Books
    • Fees
    • Equipment
    • Supplies

You can’t claim expenses for:

  • Room and board
  • Travel
  • Research
  • Clerical help
  • Equipment that’s not required of all students enrolled in a course
  • Costs not required for enrollment

Partially taxable income

Scholarship money is taxable if used for these education expenses:

  • Room and board
  • Travel
  • Any other expense not required for enrollment

Report your taxable scholarship amount on one of these:

If you didn’t receive a W-2 listing the taxable amount, write “SCH” and the taxable amount on the dotted line to the left of Line 7 or Line 1.

Fully taxable income

If you’re a non-degree student, include the full amount of your scholarship or fellowship in your taxable income. Do this:

  • Even if you didn’t receive a W-2
  • No matter what expenses you paid with the scholarship

Report the full amount of scholarship income on one of these:

  • Form 1040, Line 7
  • Form 1040A, Line 7
  • Form 1040EZ, Line 1

Write “SCH” and the amount on the dotted line to the left of Line 7 or Line 1.

The full amount of the scholarship is also taxable if both of these apply:

  • You’re a degree-seeking student.
  • You use the full scholarship for nonqualified expenses.

If both apply, report the full amount of scholarship income on one of these:

  • Form 1040, Line 7
  • Form 1040A, Line 7
  • Form 1040EZ, Line 1

Write “SCH” and the amount on the dotted line to the left of Line 7 or Line 1.

To learn more, see these at www.irs.gov:

  • Publication 525: Taxable and Nontaxable Income
  • Publication 970: Tax Benefits for Education

Related Topics

Related Resources

How to Save on Energy Costs — And Conserve Energy — This Winter

Check out these tips from H&R Block tax pros to save on the electric bill while staying warm this winter season.

Military Spouse Residency Rules

Military spouses who have moved states might be able to keep the same home as their spouse. Review military spouse residency rules with help from H&R Block.

State of Legal Residency for Active Duty Members

Learn more about the state of legal residency for active duty members with help from the tax expert at H&R Block.

New Tax Law Effective Date

When does tax reform take effect? The new tax law passed in 2017, with most provisions going into effect in tax year 2018. Learn more with the experts at H&R Block.