Introduction
Scholarships and fellowships may be taxable or tax exempt; a fellowship is the same thing as a scholarship for tax purposes. Qualified scholarships are tax exempt. Nonqualified scholarships are taxable. A qualified scholarship is money that is applied toward tuition expenses, required enrollment fees, books, and supplies that are required as part of the normal coursework for a semester. A nonqualified scholarship is money received that exceeds qualified expenses, such as room, board, and living expenses. The university is required to annually report tuition paid and scholarships received on a 1098-T information form that is useful for computing and claiming educational tax credits on a student or parent’s personal income tax return.
IRS Information
The IRS publishes a lot of information about the taxability of scholarships which is located at their website:
IRS Scholarship Taxability Information Page
The IRS also encourages taxpayers who may or may not have received a scholarship to take advantage of the educational tax credits on their individual tax returns.This information is also available on the IRS website:
IRS Education Tax Credit Information Page
1098-T reporting
In January of each year, the university issues an IRS 1098-T information return to most of our enrolled students. This form is required by law and is used by students and parents to compute and claim educational tax credits on their individual tax returns. Most students opt to receive this form electronically when they enroll for classes. Copies of the current and prior 1098-T forms can be obtained online by using your assigned student user name and password. Questions about this form should be referred to the Student Business Services representative listed in the First Contact information. Additional information about the 1098-T form is available on the Student Business Services website:
