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Old 02-11-2008, 06:20 PM
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What amount of Grants and Scholarship is Taxable?

My wife was given grant/fellowship money to gain certification within Nursing.

Some of it was for living expenses and tuition and books etc.

I believe most or all of it is not taxable if used for higher education

I see no place to report this on my forms, but I don't want to leave it out of my return and trigger an audit.

Bottom line is if this is fellowship money and it is used for higher education and not taxable, where do I report the 1099-MISC?


Last edited by TaxGuru : 03-13-2008 at 11:32 AM. Reason: Clarity


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Old 02-12-2008, 02:32 PM
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Are Scholarships and Fellowships all taxable?

Per the IRS Tax Code, qualified scholarship and fellowship grants are treated as tax–free amounts if all the following conditions are met:

1. You are a candidate for a degree at an educational institution that maintains a regular faculty and curriculum and normally has a regular enrolled body of students in attendance at the place where it carries on its educational activities.

2. Amounts you receive as a scholarship or fellowship are used for tuition and fees required for enrollment or attendance at the educational institution, or for books, supplies, and equipment required for courses of instruction."

However, the amounts used for incidental expenses, such as room and board, travel, and optional equipment are includable as income.

In your specific case, clearly your spouse who received the Nursing scholarship appears to meet both above the requirements 1 and 2. Thus, it would seem if the amounts of the scholarship received by your wife that was used for tuition and fees would be not deductible.

The portion used for incidental expenses such as living expenses, room and boarding would be includable in income.

Generally speaking, your spouse will receive some kind of W-2 indicating the Scholarship received. If she did receive this, then the taxable amount must be reported on line 7.

If the taxable amount was not reported on a Form W-2, enter “SCH” and the taxable amount on the dotted line next to line 7.

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Old 02-14-2008, 12:33 AM
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Quote:
Originally Posted by TaxGuru View Post
Per the IRS Tax Code, qualified scholarship and fellowship grants are treated as tax–free amounts if all the following conditions are met:

1. You are a candidate for a degree at an educational institution that maintains a regular faculty and curriculum and normally has a regular enrolled body of students in attendance at the place where it carries on its educational activities.

2. Amounts you receive as a scholarship or fellowship are used for tuition and fees required for enrollment or attendance at the educational institution, or for books, supplies, and equipment required for courses of instruction."

However, the amounts used for incidental expenses, such as room and board, travel, and optional equipment are includable as income.

In your specific case, clearly your spouse who received the Nursing scholarship appears to meet both above the requirements 1 and 2. Thus, it would seem if the amounts of the scholarship received by your wife that was used for tuition and fees would be not deductible.

The portion used for incidental expenses such as living expenses, room and boarding would be includable in income.

Generally speaking, your spouse will receive some kind of W-2 indicating the Scholarship received. If she did receive this, then the taxable amount must be reported on line 7.

If the taxable amount was not reported on a Form W-2, enter “SCH” and the taxable amount on the dotted line next to line 7.
Thanks for the info. Since I'm using Turbo Tax, its still not clear where I report this grant ( considering it is non-taxable).



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Old 02-14-2008, 12:07 PM
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Report it on Line 7, as per the IRS instructions!

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