Warning: Scholarship Recipients may owe IRS

Room, board, and housing taxable are taxable under the Internal Revenue Code

David W. Rude
Mercury Staff

From The Mercury Archives: March 28, 1994

What do you mean I owe the IRS? It may be news to many on scholarship that certain scholarship benefits are viewed as taxable income. The freshmen on the UTD Academic Achievement Scholarship were mailed a statement breaking down the amount of rent, tuition, and the living expenses stipend (for semi-finalists only). What the letter neglected to mention is that the living expenses and rent are taxable. According to IRS Publication 520 entitled Scholarships and Fellowships, “Only amounts for tuition, fees, books, supplies and equipment are not taxable. Amounts for other expenses, such as room, board, and travel are taxable.” The publication also states that “The part of any grant that represents payment for teaching, research, or other services is taxable.” The publication goes on to explain what is considered a scholarship or fellowship and why books, fees, supplies and equipment are non-taxable.

Other useful information inside the document includes cancellation of student loan debt, and how taxes differ if students are claimed by their parents as dependents. Another useful tool is “Table 3” on page six which is a worksheet to find out how much a student on a fellowship or scholarship might owe.

IRS Publication 4 entitled “Student’s Guide to Federal Income Tax” covers topics including where tax dollars go, how taxes are computed, how taxes are paid, if a person has to file a return, which incomes are taxable, what items can be deducted, how to file, when a refund is available, and how to get free help. This publication also includes sample 1040 tax forms with the numbers filled in and the steps explained.

By dialing 767-1792 on a touch tone phone in the local Dallas area students can obtain recorded tax information about 140 topics or automated refund information through Tele-Tax. The automated refund information is updated every seven days and is available Mon. – Fri. 7 a.m. to 11:30 p.m. If you call, be sure you have a copy of your tax return in front of you or be able to enter the first social security number on the return, the filing status, and the exact whole-dollar amount of your refund. Outside the Dallas area the number is also toll free, 1-800-829-4477. Some of the Tele-Tax topics are also available in Spanish.


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In conjunction with the release of this article the library has worked to make Publication 4 – “Student’s Guide to Federal Income Tax”, Publication 520 – “Scholarships and Fellowships” and an excerpt from Publication 17 = “Your Federal Income Tax” which contains the code numbers for the Tele-Tax Topics, available on reserve under the name “Student Tax”. If you want an original copy you can pick up the publications at the Earl Cabell Federal Building in downtown Dallas at 1100 Commerce Street on the street level. All that is required is to give a list of the publications you need to the person working in the publications office. Or, if you’d rather order the publications by mail there is an order blank at the back of some of the IRS publications including Publication 4. It usually takes two weeks to receive publications by mail, but the only cost is the envelope.


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