Is Univ of California scholarship (1098-T) considered as California Income?

[ahnbh210]

Hello, I worked in Texas and moved to California to go to grad school. Hence I'm a part-year California resident for tax purposes. I only have w-2 form from Texas and 1098-T scholarship form from UC system; I didn't work in CA but only received scholarship (Tax wasn't withheld so I owe federal).

I'm trying to file CA state tax and it's asking how much of the total adjusted income from w-2 were made in CA. In this case, do I put 0 as I have no California w-2? or amount on 1098-T? It's quite confusing as my adjusted income looks like the sum of Texas w-2 and 1098-T UC scholarship.

Thank you

[MichaelMc]

I suggest you go back to your federal tax return and verify that everything is correctly entered there. If the federal forms are correct, the correct information should flow to the state tax returns. 

Scholarships are generally not taxable income if used to pay qualified educational expenses (tuition and fees, not room and board). Unless scholarships, reported in Box 5 of Form 1098-T, exceed your qualified tuition and fees, reported in Boxes 1 or 2, you should not have taxable income from your scholarship. If the scholarship does result in some taxable income, then it would also be taxable for California purposes.

I agree with you, that your W-2 income, earned in Texas, is not taxable in California.

For more information about taxable scholarships, please read this TurboTax FAQ Why Is My Scholarship Taxable?