Why sign in to the Community?

  • Submit a question
  • Check your notifications
Sign in to the Community or Sign in to TurboTax and start working on your taxes
New Member
posted Feb 28, 2021 11:57:33 AM

Does anyone know why I owed taxes this year, as opposed to getting a return? I made less than 10k overall and I started college. Do my scholarships affect this?

0 3 294
3 Replies
Level 15
Feb 28, 2021 12:06:36 PM

Yes, scholarship amounts that are in excess of qualified education expenses are taxable.

New Member
Feb 28, 2021 12:08:56 PM

Thanks. My scholarships didn't cover all of my tuition, so I still payed out of pocket. Since the scholarships were done through the school I don't think I got federal aid; would this affect my federal return as well?

Expert Alumni
Feb 28, 2021 12:09:50 PM

Yes,  Scholarships can affect your taxable income.

 

If you receive a scholarship, a fellowship grant, or other grant, all or part of the amounts you receive may be tax-free. Scholarships, fellowship grants, and other grants are tax-free if you meet the following conditions:

  • You're a candidate for a degree at an educational institution that maintains a regular faculty and curriculum and normally has a regularly enrolled body of students in attendance at the place where it carries on its educational activities; and
  • The amounts you receive are used to pay for tuition and fees required for enrollment or attendance at the educational institution, or for fees, books, supplies, and equipment required for courses at the educational institution.

You must include in gross income:

  • Amounts used for incidental expenses, such as room and board, travel, and optional equipment.
  • Amounts received as payments for teaching, research, or other services required as a condition for receiving the scholarship or fellowship grant.
  • However, you don't need to include in gross income any amounts you receive for services that are required by the National Health Service Corps Scholarship Program, the Armed Forces Health Professions Scholarship and Financial Assistance Program, or a comprehensive student work-learning-service program (as defined in section 448(e) of the Higher Education Act of 1965) operated by a work college.

Topic No. 421 Scholarships, Fellowship Grants, and Other Grants | Internal Revenue Service (irs.gov)