College scholarship? Learn If Your Scholarship is Taxable.
Congratulations! You have received a scholarship for school, but what you use your scholarship money for may determine whether you pay taxes on it or not. To make sure you are ready when tax time rolls around, find out if your scholarship is taxable and what you need to do when you file your return.
In order for a scholarship to be considered tax-free, it must be used for purposes outlined below and you must be considered a full-time or part-time candidate for a degree at a primary, secondary or accredited post-secondary institution. These include:
Your scholarship is taxed if it is used to cover the following:
· Room and board,
· Clerical help, or
· Equipment and other expenses that are not required for enrollment in, or attendance at an, eligible educational
Reporting Your Scholarship for Tax Purposes:
Whether you must report your scholarship, depends on whether you must file a return and whether any part of your scholarship is taxable.
If your only income is a completely tax-free scholarship, you do not have to file a tax return and no reporting is necessary. If all or part of your scholarship is taxable and you are required to file a tax return, report the taxable amount as explained
· If you are filing a 1040EZ form, print “SCH” and the taxable amount to the right of the words “W-2 form(s)” on line 1.
· For the 1040 or 1040A forms, write “SCH” and the taxable amount on the dotted line next to line 7 on the 1040 or in the space to the left of line 7 on the 1040A.
Note: You must report the taxable amount, whether or not you received a Form W-2.