A scholarship or fellowship grant is tax free (excludable from gross income) only if you are a candidate for a degree at an eligible educational institution. Any amount of scholarship or fellowship that is greater than your education expenses is taxable.
If you have offsetting education expenses enter the scholarship or grant as part of your education expenses.
Select Federal Taxes
Select Deductions and Credits
Select Show More at Education
Select Start or Update at Expenses and Scholarships (Form 1098T)
Select Edit at Scholarships/Grants (for all schools
If you do are not a candidate for a degree, or if you do not have offsetting education expenses, the fellowship should be reported as less common income.
• Select Federal Taxes
• Select Wages and Income
• Scroll down to Less Common Income and select Start or Review
• Select Start next to Miscellaneous Income 1099A, 1099C and enter the information provided on your form
See IRS Publication 970 for additional information.
https://www.irs.gov/publications/p970/ch01.html
