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Lev
Lev, Tax Advisor
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Do I report Scholarship as income

Resolved Question:

I have no other income. I only get a scholarship and grants for full-time student status at my State University. I got a 1098-T, but no one knows what I am supposed to do with it. I have never worked and have never received a W-2. I tried to figure out what line it goes on on the 1040, but it doesn't seem to fit anywhere.
Submitted: 7 years ago.
Category: Tax
Expert:  Lev replied 7 years ago.

Scholarships and grants may be taxable.

A candidate for a degree can exclude amounts received as a qualified scholarship or fellowship. A qualified scholarship or fellowship is any amount you receive that is for:

  • Tuition and fees to enroll at or attend an educational institution, or
  • Fees, books, supplies, and equipment required for courses at the educational institution.

Amounts used for room and board do not qualify for the exclusion.

Generally, you must include in income the part of any scholarship or fellowship that represents payment for past, present, or future teaching, research, or other services. This applies even if all candidates for a degree must perform the services to receive the degree.

Do not include in income the part of any scholarship or fellowship representing payment for teaching, research, or other services if you receive the amount under the National Health Service Corps Scholarship Program or the Armed Forces Health Professions Scholarship and Financial Assistance Program.

See Publication 970 for more information on qualified scholarships and fellowship grants. - http://www.irs.gov/pub/irs-pdf/p970.pdf

Are you a dependent on your parent's tax return? If so they may deduct some educational expenses.

Customer: replied 7 years ago.
I knew all of that. What I can't find out is where is it reported on the 1040?

No, I'm not a dependent on my parents' return.

My scholarship totalled 12575. Box 2 says $7784 is qualified.

Where on the form do I report this? I am using the H&R tax software and it doesn't even ask me for it.
Expert:  Lev replied 7 years ago.

If part of your scholarship is taxable - taxable amount should be reported on the line 7 form 1040 - http://www.irs.gov/pub/irs-pdf/f1040.pdf . Enter "SCH" and the taxable amount on the dotted line next to line 7.

Qualified educational expenses may be deductible on your tax return if you have taxable income and you paid this expenses (expenses paid using loan are considered as paid by you). You may deduct such expenses on the line 36 (the law was signed in December after the form was approved and there is no separate line) or line 50.

Lev, Tax Advisor
Category: Tax
Satisfied Customers: 22692
Experience: Taxes, Immigration, Labor Relations
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