turbotax icon
cancel
Showing results for 
Search instead for 
Did you mean: 
turbotax icon
cancel
Showing results for 
Search instead for 
Did you mean: 
turbotax icon
cancel
Showing results for 
Search instead for 
Did you mean: 
turbotax icon
cancel
Showing results for 
Search instead for 
Did you mean: 
Announcements
Close icon
Do you have a TurboTax Online account?

We'll help you get started or pick up where you left off.

When Do Taxes Become Mandatory for Grant or Scholarship "Income"

Is my impression correct that you MUST pay taxes on grants or scholarships in excess of expenses for an academic session as reflected by Form 1098T? If Box 1 lists $2,000 in "Payments Made," and Box 5 has $5000 for grants or scholarships, does the $2,500 surplus attract mandatory tax liability? Thanks!

Connect with an expert
x
Do you have an Intuit account?

Do you have an Intuit account?

You'll need to sign in or create an account to connect with an expert.

2 Replies
Hal_Al
Level 15

When Do Taxes Become Mandatory for Grant or Scholarship "Income"

The simple answer is: when box 5 exceeds box 1 by more than $12,200.

Everybody gets a (potential) $12,200 standard deduction, even student-dependents*. So, if you have less than $12,200 total taxable income, you will owe no tax and do not even have to file a tax return

 

*There is an exception for dependents with investment income (interest, dividends, capital gains and taxable 529 plan distributions)

DianeC958
Expert Alumni

When Do Taxes Become Mandatory for Grant or Scholarship "Income"

Yes, if Box 1 is less than the amount in Box 5 then the excess amount is considered taxable income.

 

There are other school expenses that you may deduct that do not appear on form 1098T they are

 

  • Fees the school charges
  • Cost of books and supplies for classes taken

By adding these other expenses to your return you reduce the amount of scholarship that is taxable.

 

Link about Taxes on Scholarships

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
message box icon

Get more help

Ask questions and learn more about your taxes and finances.

Post your Question
Manage cookies