Generally,
you pay income taxes on taxable scholarships and grants but not social security or Medicare
taxes.
Scholarship, fellowship,
stipends or grant money, if not used for qualified education
expenses is taxed as income and belongs on Form 1040 Line 7 with SCH in front of the line number.
Per IRS
Publication 970 Tax Benefits for Education : Payment
for services. In most cases, you must
include in income the part of any scholarship
or fellowship that represents payment for past, present, or future
teaching, research, or other
services. This applies even
if all candidates for a degree must perform the services to receive the degree.
To enter scholarships with NO 1098-T:
- Type scholarships in the search box and click search.
- Click
on Jump to scholarships.
- Continue
with the onscreen interview.
To enter your 1098-T:
- Don't enter your 1098-T if your employer reimbursed you for the
tuition. Otherwise:
- Open
(continue) your return in TurboTax, if it's not already open.
- In
the search box, search for 1098-T or 1098T (lower-case
works also) and then click the "Jump to" link in the search
results.
- Answer Yes to Do you want to enter your higher
education expenses?
- If
you land on the Let's
estimate how much you could get this year, click Skip this.
- If
you land on the Your
Education Expenses Summary screen, first select Edit next to an existing
student or select Add
a new one before proceeding.
- Answer
any questions that follow. After a few screens, you'll be asked if you received
a 1098-T. Answer Yes and
click Continue.
- Enter
your Form 1098-T exactly
as you see it, even if you think it's wrong. Here are some
important tips:
- If
any boxes on your 1098-T are blank, leave
them blank. Don't enter 0 (this may cause errors later).
- If
boxes 1 or 2 on your 1098-T form are wrong, enter those amounts anyway. Then
click What if
this is not what I paid? right below box 2 and enter the
correct amount of tuition paid.
- Don't
include grants not already listed in Box 5. We'll ask about those later.
- Click Continue when
you're done entering the information from your 1098-T. Answer any additional
questions on the following screens.
Related information: