Topic no. 421, Scholarships, fellowship grants, and other grants

A scholarship is generally an amount paid or allowed to, or for the benefit of, a student at an educational institution for the purpose of study. A fellowship grant is generally an amount paid for the benefit of an individual to aid in the pursuit of study or research. Other types of grants include need-based grants (such as Pell Grants) and Fulbright grants.

Tax-free

If you receive a scholarship, a fellowship grant, or other grant, all or part of the amounts you receive may be tax-free. Scholarships, fellowship grants, and other grants are tax-free if you meet the following conditions:

• You're a candidate for a degree at an educational institution whose primary function is the presentation of formal instruction and that maintains a regular faculty and curriculum and normally has a regularly enrolled body of students in attendance at the place where it carries on its educational activities; and
• The amounts you receive are used to pay for tuition and fees required for enrollment or attendance at the educational institution, or for fees, books, supplies, and equipment required for courses at the educational institution.

Taxable

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 as part of any scholarship or fellowship grant 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.

How to report

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, Form 1040-SR or Form 1040-NR, and the taxable portion was reported to you in box 1 of Form W-2, include the taxable portion in the total amount reported on Line 1a of your tax return. If the taxable amount wasn't reported to you in box 1 of Form W-2, enter it on Line 8 (and attach Schedule 1 (Form 1040) PDF).
• If filing Form 1040-NR, and the amount reported to you in box 1 of Form W-2 is exempt from U.S. tax under an income tax treaty, include that amount on Line 1k of the Form 1040-NR and complete item L of Schedule OI (Form 1040-NR) PDF.

Estimated tax payments

If any part of your scholarship or fellowship grant is taxable, you may have to make estimated tax payments on the additional income. For additional information on estimated tax, refer to Publication 505, Tax Withholding and Estimated Tax and Am I required to make estimated tax payments?

Additional information

For more information, refer to Publication 970, Tax Benefits for Education and Do I include my scholarship, fellowship, or education grant as income on my tax return?