Is money from student loans considered taxable income?

A school loan is not taxable at the time you get the money and should not be included as income on your return. A loan is not income because you are expected to repay the amount borrowed (plus interest). If, at a later date, any part of the loan is forgiven, the amount forgiven would be income in that year. Under certain circumstances, forgiven student loans are not income. For more information, refer to Exceptions under Canceled Debts in Publication 525, Taxable and Nontaxable Income.

References:

• Publication 525, Taxable and Nontaxable Income
• Tax Topic 422, Nontaxable income

I received an academic scholarship that is designated to be used for tuition and books. Is this taxable?

Qualified scholarships and fellowships are treated as tax-free amounts if all of the following conditions are met:

1. You are a candidate for a degree at an educational institution,
2. Amounts you receive as a scholarship or fellowship are used for tuition and fees required for enrollment or attendance at the educational institution, or for books, supplies, and equipment required for courses of instruction, and
3. The amounts received are not a payment for your services.

For additional information on Scholarship and Fellowship Grants, refer to Tax Topic 421, and Publication 970, Tax Benefits for Education.

References:

• Publication 970, Tax Benefits for Education
• Tax Topic 421, Scholarship and fellowship grants

Can I exclude any scholarship or grant from being taxed?

If you received a scholarship or fellowship, all or part of it may be taxable, even if you did not receive a Form W-2. Generally, the entire amount is taxable if you are not a candidate for a degree.

If you are a candidate for a degree, you generally can exclude from income that part of the grant used for:

• Tuition and fees required for enrollment or attendance, or
• Fees, books, supplies, and equipment required for your courses.

Taxable scholarships are reported on line 7 of Form 1040 or Form 1040A or line 1 of Form 1040EZ (PDF). If you did not receive a Form W-2, please write "SCH" and the taxable amount to the left of the line.

References:

• Publication 970,Tax Benefits for Education
• Tax Topic 421, Scholarship and Fellowship Grants

Can I exclude from taxable income the room and board portion of a grant or fellowship?

No, you cannot exclude from income any part of the grant used for room and board. Report such amounts on line 7 Form 1040 or Form 1040A or line 1 of 1040EZ. Please write "SCH" and the dollar amount to the left of the line.

References:

• Publication 970 , Tax Benefits for Education
• Tax Topic 421, Scholarship and Fellowship Grants
• Tax Topic 513, Educational Expenses

Do I need to report payments I receive for taking part in a work training program in my income?

Payments you receive from a state welfare agency for taking part in a work-training program are not included in your income as long as the payments (exclusive of extra allowances for transportation or other cost) do not total more than the public welfare benefits you would have received otherwise. If the payment are more than the welfare benefits you would have received, the entire amount must be included in your income as wages on line 7 of Form 1040 or Form 1040A or line 1 of Form 1040EZ (PDF).

References:

• Publication 525, Taxable and Nontaxable Income
• Tax Topic 401, Wages and salaries