Publication 520: Scholarships and Fellowships; Publication 520 Introductory Material

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Table of Contents

Important Reminders

Estimated tax. You may have to pay estimated tax if the grantor of a scholarship or fellowship does not withhold tax or withholds insufficient tax on the taxable part of your scholarship or fellowship grant. For more information, see Estimated Tax, later.

Individual retirement arrangements (IRAs). You can set up and make contributions to an IRA if you received taxable compensation. Under this rule, a taxable scholarship or fellowship is compensation only if it is shown in box 1 of Form W-2, Wage and Tax Statement. For more information about IRAs, see Publication 590, Individual Retirement Arrangements (IRAs).

Photographs of missing children. The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. You can help bring these children home by looking at the photographs and calling 1–800–THE–LOST (1–800–843–5678) if you recognize a child.

Introduction

This publication covers the rules for scholarships, fellowships, and tuition reductions. These amounts are tax free if they meet the rules discussed in this publication.

This publication also discusses the estimated tax rules and some of the special rules that apply to U.S. citizens and resident aliens who are studying, teaching, or researching abroad under scholarships and fellowships.

This publication does not discuss certain items that are covered in other publications. These include:

Hope and lifetime learning credits, Coverdell education savings accounts, qualified tuition programs, and other tax benefits for education. See Publication 970, Tax Benefits for Education.
Student loans that were canceled or forgiven. See Publication 525, Taxable and Nontaxable Income.
Scholarships and fellowships paid to nonresident aliens. See Publication 519, U.S. Tax Guide for Aliens.

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Useful Items - You may want to see:

Publication

54 Tax Guide for U.S. Citizens and Resident Aliens Abroad
501 Exemptions, Standard Deduction, and Filing Information
505 Tax Withholding and Estimated Tax
508 Tax Benefits for Work-Related Education
514 Foreign Tax Credit for Individuals
525 Taxable and Nontaxable Income
901 U.S. Tax Treaties
970 Tax Benefits for Education

See How To Get Tax Help near the end of this publication for information about getting these publications and forms.

Publication 520Introductory Material

Important Reminders

Introduction

Useful Items - You may want to see:

Publication 520
Introductory Material