question.jpgIn Federal Income Tax

Do I have to pay taxes on my scholarship or fellowship?

Generally, scholarships are tax free, while fellowships are less likely to be so. Basically, if you are a candidate for a degree (i.e., you’re in school), any scholarship or fellowship which goes towards tuition, fees, books, supplies and/or equipment is tax free. Any money above and beyond that is not tax free - for example, a graduate student who receives a fellowship not just for tuition but for teaching or conducting research must pay taxes on the amount in excess of the school’s tuition. If the taxable amount is over $400, you’ll have to count it as self-employment when figuring out what the specific tax rate is (i.e., you’ll have to use Schedule SE).