SCH refers to taxable scholarship. In a nutshell, it is the amount of scholarship and grants that exceed your qualifying education expenses, or the amount of scholarships and grants that you have elected to make taxable to claim a credit such as the American Opportunity credit.
To calculate:
- First, subtract the qualified education expenses you claimed from the scholarship you received. If you are claiming additional scholarship as taxable, include that amount also.
- Next, subtract all wages reported in box 1 of all your Forms W2 from the Wages reported in Box 1 of Form 1040.
- Step 1 should equal Step 2, and would be the amount included as SCH on line 1 of your 1040.
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