Tax-Free Employer Provided Assistance

Forum|Forum|4 years ago
May 17, 2021
1 reply
0 views

I have a scholarship for medical school with the VA HPSP. I will be working for them in the future to pay back the scholarship with service, but do not currently receive a W2. Does this count as Tax-Free Employer Provided Assistance? Should I select 'Yes' or 'No' when asked about this on my taxes?

TurboTax Free Edition Online

Hal_Al

Employee

See example 2 at page 6 at https://www.irs.gov/pub/irs-pdf/p970.pdf

Example 2. You are a candidate for a degree at a medical school. You receive a scholarship (not under any
of the exceptions mentioned above) for your medical education and training. The terms of your scholarship require you to perform future services. A substantial penalty applies if you don't comply. The entire amount of your grant is taxable as payment for services in the year it is received.

For more discussion, see https://ttlc.intuit.com/community/college-education/discussion/re-what-is-the-tax-rule-for-scholarship-for-service/01/2284775#M42327