Taxation of Scholarships and Fellowships - U.S. Residents Only
A scholarship or fellowship generally means an amount paid or allowed to, or for the benefit of, a student, whether an undergraduate or a graduate, to aid such individual in pursuing his studies (26 CFR § 1.117–3). A scholarship or fellowship grant may also be a reduction in the amount owed by the recipient to an educational organization for tuition, room and board, or any other fee.
Under federal tax law, a scholarship or fellowship provided to any student is generally taxable and must be reported on a tax return; however, a candidate for a degree can exclude amounts received as a qualified scholarship or fellowship.
A qualified scholarship or fellowship is any amount you receive that is for:
- Tuition and fees required to enroll at or attend an eligible educational institution, or
- Course related expenses, such as fees, books, and equipment that are required for courses at the eligible educational institution. These items must be required of all students in your course of instruction.
Amounts used for room, board, travel and other personal expenses do not qualify for the exclusion. These amounts are non-qualified scholarships and included as income on a tax return.
Canadian students at Indiana University should consult with tax professionals about the income tax deduction allowed for tuition and fees at a university outside of Canada. The Form TL11A can be used to certify tuition and fees paid to Indiana University during the last calendar year. If this form is requested for tax purposes, and you are located on the Bloomington Campus, please contact Student Central on Union email@example.com. Outside of the Bloomington Campus please contact the Bursar’s Office for your campus to set up an appointment with a representative who will be able to assist you in completing Part 1 of the form.
Calculating Taxable Scholarships & Fellowships
Students bear the tax burden of determining taxable scholarships or fellowships and Indiana University does not issue a Form 1099-MISC to scholarship/fellowship recipients. To calculate the amount of taxable scholarships you received follow these directions to access your Bursar account activity.
- Login to One.IU and Click Start
- Click on the History tab. Enter the date From: 1/1/20XX To: 12/31/20XX.
- Click on the Go button
Take this report and enter the information into the table on page 6 of IRS Publication 970 to calculate taxable scholarships/fellowships. The table below provides a broad overview of the tax treatment of scholarship and fellowship payments. You may also use the comprehensive detail provided on the qualified expenses page to determine IU expenses to deduct against the aid received.
|Payment for||Degree candidate||Not a degree candidate|
♦ If required of all students in the course
♣ Does not include amounts received under the National Health Service Corps Scholarship Program or the Armed Forces Health Professions Scholarship and Financial Assistance Program.