Taxes
Taxable Scholarships
If you’re receiving a scholarship or fellowship, it’s important to know how U.S. tax laws may apply to your award. Here’s what you need to know:
Tax-Free Expenses
- Tuition and Course-Related Expenses: Scholarships or fellowships used solely for tuition, fees, books, supplies, and equipment required for your courses are generally tax-free. No need to report this portion on your tax return.
Taxable Portions of Your Award
- Non-Educational Expenses: Amounts used for living expenses like room and board are taxable. You’ll need to report these on your federal (and state, if applicable) tax return.
Keep Good Records
- Maintain records of how you spend your scholarship to document tax-free expenses if the IRS requires proof.
Tax Withholding Information
- U.S. Citizens & Permanent Residents: Generally, no taxes are withheld if no services are required in exchange for your award. You’re responsible for reporting any taxable amounts.
- Nonresident Students: Taxable portions beyond tuition may be subject to a 14% withholding. If your country has a tax treaty with the U.S., you might be eligible for a tax refund.
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Understanding your tax obligations ensures compliance and keeps your finances on track.