How to report grants and subsidies on taxes.?
I am a college student, and I am tax returns for the first time – and I have a question on how to file and other scholarships. I have a scholarship for tuition and books, and then I have a Pell Grant and other need / merit-based grants covering my room and board. So basically – I do not pay for college, but am I supposed to share my gifts as taxable income? I do not understand how I should deal with this issue, including my grants that income would mean that I have $ 500 in taxes – but I have only received government money to start … so why should I give in return? I have not received a W-2 or any other form of subsidies, although I can see my line 1098-T. I know that my scholarship tuition and books is tax free, but no indication of what I do on subsidies for room and board?
IRS Publication 970 deals with scholarships and grants. Basically, the scholarship or grant is treated the same way. Eligible expenses and the cost of tuition, fees, etc. are not taxed as income. Money expenditure spent on non-qualified room and board, personal expenses etc. is taxable and if you do not have a W-2, you must enter this amount on line 7 of Form 1040 and write in SCH space next to the line. I'm sure this is not the answer you wanted to hear. I am also convinced most of the recipients of scholarships do not declare their scholarship. You are to be commended for your honesty and integrity!
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