Taxability of Scholarships and Fellowships

The Tax Reform Act of 1986 changed the rules regarding tax-free treatment of scholarships and/or fellowship grants for students pursuing a degree. Now, only candidates for a degree may exclude any portion of a scholarship or fellowship from income. The amount to be excluded may not exceed the aggregate of tuition and required fees, 书, 供应, 和设备. 奖 in excess of this amount – most notably funds for room and board or living expenses – are now subject to federal income tax.

IRS guidelines specify that the student (not the University) is responsible for determining whether a scholarship or fellowship grant, in whole or in part, is includable in gross income. Each student is individually responsible for substantiating tuition and course-related expenses as well as awards received. 因此, you should save all receipts for tuition, 注册费用, course-required fees, 书, 供应 和设备 required for courses, in order to document exclusion of these amounts from taxable income. You should also save award letter(s) and other documentation supporting the award date(s).

The University and other grantors are not required to report awards and withhold taxes for U.S. citizens and permanent residents, 除非教学, research or other services are required as a condition for receiving the award.

This information is not legal advice. You should contact the Internal Revenue Service or your personal tax advisor concerning specific tax questions you may have regarding tax changes resulting from the Act.

Reprinted from: Focus on 金融援助. A Publication of the Oakland University 金融援助 Office. 6/16/96