Show Scholarship And Fellowship Tax Tax Changes Recipients of scholarship and fellowship grants should review recent changes to income tax law which may affect them according to the Internal Revenue Service The Tax Reform Act of 1986 which ch changes chang s the rules wh who may exclude scholarship and fellowship grants from their income The Act also redefines what kind of income can be excluded These changes are effective for tax years beginning after 1986 and apply to grants received after August 16 1986 In the past students who were not ot candidates for a degree could exclude from their income up to of scholarship or fellowship income per month This is no longer allowed and all such income received by a non-degree non candidate must be included on the return The Act defines a scholarship as any amount received by an individual as a scholarship or fellowship fellowship fellow fellow- ship gr grant to the extent the grant is is- used for tuition and related expenses Tuition includes amounts paid for the enrollment or attendance of a student at an educational organization Related expenses expenses are fees books supplies and equipment Any other amounts received by bythe bythe bythe the student would be includible in inthe inthe inthe the recipients recipient's income for that year This would include any payment received for room board or incidental expenses expense Some scholarship grants include amounts which represent compensation for past present or future services to be provided In Inthe Inthe Inthe the past some of this could have been been- excluded from income The new law states that all aJI payments for s services s. s ar ares are n l d deU dm m th if ome i e even if the performance of the service service ser ser ser- vice is a condition of all students receiving the grant and and all candidates for fot that degree Recipients of scholarship or fellowship grants may wish to obtain a copy of the free IRS Publication Scholarships and Fellowships Fellowships Fellowships Fellow Fellow- ships or Publication Highlights Highlights Highlights High lights of 1986 Tax Changes It can be picked up at any IRS office or obtained toll-free toll 1 by calling 1040 or 1 1800 |