Taxation of Scholarships, Fellowships & Stipends Finance Division The George Washington University

If you win a cash prize in a contest, it can only be considered a scholarship if you are required to use the money for educational purposes. If the prize can be used for non-educational expenses, it is not a scholarship regardless of how you used the funds. If your award covers both tuition and room & board, the amount you use for tuition is tax-free, while the amount you use for room & board is taxable. Scholarship and fellowship recipients should retain fee statements, textbook receipts, and similar records to support their calculations of the non-taxable and taxable portions of their awards.

• There are no age restrictions on who can participate in this program.
• In fact, your grandparent can even avoid paying gift tax if they give the money directly to your school on your behalf.
• Additional training or testing may be required in CA, MD, OR, and other states.
• If filing Form 1040 or Form 1040-SR, include the taxable portion in the total amount reported on the «Wages, salaries, tips» line of your tax return.
• If the amount withheld doesn’t cover your tax obligations, you’re responsible for paying the remainder to the IRS.
• However, its accuracy, completeness, or reliability cannot be guaranteed.
• • The award covers fees, books, supplies and equipment required for your courses.

When spring comes, you will need to submit a nonresident tax return by April 15 in order to receive a refund of tax withheld from the Internal Revenue Service . The Office of International Student and Scholars can assist with this process. For more information about filing a U.S. tax return, visit the OISS Personal Taxes website. For U.S. citizens and resident aliens, the University is not required to report scholarships or fellowships to the Internal Revenue Service; reporting such income for tax purposes is the sole responsibility of the recipient. A scholarship or fellowship which is conditioned upon past, present or future services by the recipient is not a qualified scholarship or fellowship and may not be excluded from the recipient’s gross income.

Full Tuition Scholarships

This information is provided for the purpose of making fellowship recipients aware of their individual US income tax reporting responsibility. It is not intended as legal or tax advice, or as a definitive interpretation of the law. Each fellow is personally responsible for his/her individual tax preparation and payment. Specific questions regarding the tax treatment of this award should be directed to a tax advisor or the Internal Revenue Service. Your school will send you a 1098-T form detailing what financial aid was applied to your tuition, including all scholarships and grants. You can use this form when filing your taxes to know how much you owe to the IRS. However, if you’re using all or part of your scholarship funds to cover room and board, travel, tutoring services or optional supplies, that money will be treated as taxable income.

We believe students from all economic backgrounds should have the opportunity to attend the University of Washington. Finances should not be a barrier to getting a world-class education. Scholarship money is considered taxable if you use it to pay for room and board. Should I Claim Scholarships & Other Awards On My Taxes? Scholarships are one of the best forms of financial aid available — you won’t have to repay them. From thought leadership to incredible stories of student success, this is where you can get informed or get inspired about scholarships and the educational journey.

Estimated Tax Payments

The information in our reviews could be different from what you find when visiting a financial institution, service provider or a specific product’s website. All products and services are presented without warranty. There are thousands of financial products and services out there, and we believe in helping you understand which is best for you, how it works, and will it actually help you achieve your financial goals. We’re proud of our content and guidance, and the information we provide is objective, independent, and free.

The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision. While receipt of a Nurse Corps SP or NHHSP award does not make you a HRSA employee, the IRS considers such scholarship funds to be «wages» and HRSA to be the «employer» because HRSA controls the payment of the funds. Federal Insurance Contributions Act tax is composed of Social Security and Medicare taxes paid by individuals and employers. GOAL does not take any administrative fees out of the money that it forwards to other SSOs. No, as this credit may only be claimed if you file your taxes electronically.

Claiming Taxable Scholarship Income

Scholarship displacement occurs when a college reduces the amount of its own grants after the student receives a need-based scholarship. If a scholarship is used in the calculation of the Expected Family Contribution , scholarship displacement cannot occur.

A scholarship is considered fee for services if the services are required as a condition of receiving the scholarship. There are, however, exceptions for graduate teaching and research assistantships and certain federal health professions scholarships. If an educational institution provides a tuition waiver or tuition reduction to its faculty and staff, it is tax-free if this benefit is provided on substantially the same basis to all members of a group of employees. The group of employees must not discriminate in favor of officers, owners and highly-compensated employees. For additional guidance on university and IRS requirements relating to fellowships, scholarships, and student cash awards, including tuition waivers, access the Financial Services website,asu.edu/fs.

Tax Information for Scholarships and Fellowships

Fees apply to Emerald Card bill pay service. See Online and Mobile Banking Agreement for details. The tax identity theft risk assessment will be provided in January 2019. The tax identity theft risk assessment is based on various data sources and actual risk may vary beyond factors https://turbo-tax.org/ included in analysis. Professional golfer taxes can be complicated and confusing. Learn more about tricky golfer tax issues like travel deductions and residency rules with H&R Block. If that’s not you exactly, then you may find that some or all your award is taxable.

Congress continued the federal income tax credit available to students and their families with tuition and other eligible college related expenses. Most of the time, students working toward degrees at a college, university, or other accredited educational institution can avoid paying taxes on at least some of their scholarship funds. You generally won’t have to pay tax on scholarship money used to pay for basic expenses related to your education. The IRS calls these “qualified education expenses.» If the student claims the American opportunity tax credit, he should not apply the full $8,000 in scholarships and grants to nonqualified expenses. It is better to allocate $3,000 toward qualified education expenses and the remaining $5,000 to nonqualified expenses. This allows the student to retain $4,000 ($7,000 — $3,000) in qualified education expenses, the maximum amount allowable in calculating the American opportunity tax credit.

How education tax credits fit in

Now, let’s say your daughter is a grad student with a fellowship that requires her to be a teaching assistant. In this case, the tax rules are different. That’s because scholarship or fellowship money that represents compensation is generally taxable. The student would receive a W-2 from the school and would have to file a tax return. 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.