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Scholarships and Fellowships (continued)The Section 117 exclusion says a student who is a candidate for a degree may be able to exclude some or all income received under a "qualified" scholarship. A qualified scholarship is any amount received as a scholarship or fellowship grant, and used for tuition, fees, books, supplies, and equipment that the student is required to buy. Amounts used for other purposes, such as room and board or travel, are not excludable. Section 117 does not apply if the student must perform services to receive the money (i.e. teaching assistant). Some treaties also exempt amounts received as scholarship or fellowship grants. To prevent withholding, the student must file Form W-8BEN with the educational institution or other provider of the scholarship. 
Scholarship and Fellowship Grants Exclusion Line 8r—Scholarship and fellowship grants not reported on Form W-2 Enter the amount of scholarship and fellowship grants not reported on Form W-2, reduced by the total amount exempt by treaty. However, if you were a degree candidate at an eligible educational organization, generally include on line 8r only the amounts you used for expenses other than tuition, fees, and required, course-related expenses. For example, amounts used for room, board, and travel must be reported on line 8r. Note. Attach any Form(s) 1042-S you receive from the educational organization to page 1 of the Form 1040-NR. Scholarship and fellowship grants are reported in box 2 of Form 1042-S. For more information about tax requirements for scholarships and fellowships, see Pub. 519 and chapter 1 of Pub. 970. |
