Scholarships or portions of scholarships may be taxable. It all depends on how you use them. To quickly get to that section of TurboTax, type scholarships in the search and and select the Jump to scholarships.
If your financial aid is reported in Box 5 of your 1098-T form, it'll be accounted for when you enter your 1098-T.
Otherwise, we'll ask about scholarships, grants, assistance (etc.) towards the end of the Education interview. Look for the screen Did [student name] receive a scholarship or grant in 2020? Select Yes and then enter the amount received in the appropriate field.
If you use your scholarship to pay for any of these, it counts as income and the amount paid is taxable:
- Room and board
- Travel and incidental expenses
- Any fees, books, and supplies or equipment that aren't required for your courses
If you're getting a degree at an eligible school, your scholarship is tax-free when used for:
- Tuition and fees
- Fees, books, supplies or equipment required for your courses
- Any scholarship or fellowship for services received under the National Health Services Corps Scholarship Program or the Armed Forces Health Professions Scholarship and Financial Assistance Program
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