Unused scholarship money is reported as wage income on Form 1040. You must include in gross income: Amounts used for incidental expenses, such as room and board, travel, and optional equipment. Amounts received as payments for teaching, research, or other services required as a condition for receiving the scholarship or fellowship grant. However, you don't need to include in gross income any amounts you receive for services that are 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) operated by a work college.Generally, you report any portion of a scholarship, a fellowship grant, or other grant that you must include in gross income as follows: If filing Form 1040, include the taxable portion in the total amount reported on the "Wages, salaries, tips" line of your tax return. If the taxable amount wasn't reported on Form W-2, enter "SCH" along with the taxable amount in the space to the left of the "Wages, salaries, tips" line. If filing Form 1040-NR, report the taxable amount on the "Scholarship and fellowship grants" line.Topic No. 421 Scholarships, Fellowship Grants, and Other Grants IRS link.

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garyward2

Question

Why is 1098-T monies is treted as income when it is a scholarship.

Forum|Forum|5 years ago
April 9, 2021
1 reply
0 views

No text available

DawnC

Employee

Unused scholarship money is reported as wage income on Form 1040. You must include in gross income:

Amounts used for incidental expenses, such as room and board, travel, and optional equipment.
Amounts received as payments for teaching, research, or other services required as a condition for receiving the scholarship or fellowship grant. However, you don't need to include in gross income any amounts you receive for services that are 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) operated by a work college.

Generally, you report any portion of a scholarship, a fellowship grant, or other grant that you must include in gross income as follows:

If filing Form 1040, include the taxable portion in the total amount reported on the "Wages, salaries, tips" line of your tax return. If the taxable amount wasn't reported on Form W-2, enter "SCH" along with the taxable amount in the space to the left of the "Wages, salaries, tips" line.
If filing Form 1040-NR, report the taxable amount on the "Scholarship and fellowship grants" line.

Topic No. 421 Scholarships, Fellowship Grants, and Other Grants IRS link.

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Hal_Al

Employee

Scholarships that pay for qualified educational expenses (QEE - tuition, fees, books and other course materials) is tax free. Scholarship amounts that exceed QEE is taxable income, on the student’s tax return.

If box 5 of the 1098-T exceeds box 1, TurboTax (TT) will treat the difference as taxable income, unless you enter additional QEE at books and other expenses section of TT.