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1040 Nr Ez

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1040 Nr Ez

1040 nr ez 1. 1040 nr ez   Scholarships, Fellowships, Grants, and Tuition Reductions Table of Contents Reminder Introduction Scholarships and FellowshipsTax-Free Scholarships and Fellowships Taxable Scholarships and Fellowships Reporting Scholarships and Fellowships Other Types of Educational AssistanceFulbright Grants Pell Grants and Other Title IV Need-Based Education Grants Payment to Service Academy Cadets Veterans' Benefits Qualified Tuition Reduction Reminder Individual retirement arrangements (IRAs). 1040 nr ez  You can set up and make contributions to an IRA if you receive taxable compensation. 1040 nr ez Under this rule, a taxable scholarship or fellowship is compensation only if it is shown in box 1 of your Form W-2, Wage and Tax Statement. 1040 nr ez For more information about IRAs, see Publication 590. 1040 nr ez Introduction This chapter discusses the income tax treatment of various types of educational assistance you may receive if you are studying, teaching, or researching in the United States. 1040 nr ez The educational assistance can be for a primary or secondary school, a college or university, or a vocational school. 1040 nr ez Included are discussions of: Scholarships, Fellowships, Need-based education grants, such as a Pell Grant, and Qualified tuition reductions. 1040 nr ez Many types of educational assistance are tax free if they meet the requirements discussed here. 1040 nr ez Special rules apply to U. 1040 nr ez S. 1040 nr ez citizens and resident aliens who have received scholarships or fellowships for studying, teaching, or researching abroad. 1040 nr ez For information about these rules, see Publication 54, Tax Guide for U. 1040 nr ez S. 1040 nr ez Citizens and Resident Aliens Abroad. 1040 nr ez Scholarships and Fellowships A scholarship is generally an amount paid or allowed to, or for the benefit of, a student (whether an undergraduate or a graduate) at an educational institution to aid in the pursuit of his or her studies. 1040 nr ez A fellowship is generally an amount paid for the benefit of an individual to aid in the pursuit of study or research. 1040 nr ez Amount of scholarship or fellowship. 1040 nr ez   The amount of a scholarship or fellowship includes the following: The value of contributed services and accommodations. 1040 nr ez This includes such services and accommodations as room (lodging), board (meals), laundry service, and similar services or accommodations that are received by an individual as a part of a scholarship or fellowship. 1040 nr ez The amount of tuition, matriculation, and other fees that are paid or remitted to the student to aid the student in pursuing study or research. 1040 nr ez Any amount received in the nature of a family allowance as a part of a scholarship or fellowship. 1040 nr ez Tax-Free Scholarships and Fellowships A scholarship or fellowship is tax free (excludable from gross income) only if you are a candidate for a degree at an eligible educational institution. 1040 nr ez A scholarship or fellowship is tax free only to the extent: It does not exceed your expenses; It is not designated or earmarked for other purposes (such as room and board), and does not require (by its terms) that it cannot be used for qualified education expenses; and It does not represent payment for teaching, research, or other services required as a condition for receiving the scholarship. 1040 nr ez (But for exceptions, see Payment for services,later. 1040 nr ez Use Worksheet 1–1 to figure the amount of a scholarship or fellowship you can exclude from gross income. 1040 nr ez Candidate for a degree. 1040 nr ez   You are a candidate for a degree if you: Attend a primary or secondary school or are pursuing a degree at a college or university, or Attend an educational institution that: Provides a program that is acceptable for full credit toward a bachelor's or higher degree, or offers a program of training to prepare students for gainful employment in a recognized occupation; and Is authorized under federal or state law to provide such a program and is accredited by a nationally recognized accreditation agency. 1040 nr ez Eligible educational institution. 1040 nr ez   An eligible educational institution is one whose primary function is the presentation of formal instruction and that normally maintains a regular faculty and curriculum and normally has a regularly enrolled body of students in attendance at the place where it carries on its educational activities. 1040 nr ez Qualified education expenses. 1040 nr ez   For purposes of tax-free scholarships and fellowships, these are expenses for: Tuition and fees required to enroll at or attend an eligible educational institution, and Course-related expenses, such as fees, books, supplies, and equipment that are required for the courses at the eligible educational institution. 1040 nr ez These items must be required of all students in your course of instruction. 1040 nr ez Expenses that do not qualify. 1040 nr ez   Qualified education expenses do not include the cost of: Room and board, Travel, Research, Clerical help, or Equipment and other expenses that are not required for enrollment in or attendance at an eligible educational institution. 1040 nr ez Payment for services. 1040 nr ez   Generally, you cannot exclude from your gross income the part of any scholarship or fellowship that represents payment for teaching, research, or other services required as a condition for receiving the scholarship. 1040 nr ez This applies even if all candidates for a degree must perform the services to receive the degree. 1040 nr ez (See exceptions next. 1040 nr ez ) Exceptions. 1040 nr ez   You do not have to treat as payment for services the part of any scholarship or fellowship that represents payment for teaching, research, or other services if you receive the amount under: The National Health Service Corps Scholarship Program, or The Armed Forces Health Professions Scholarship and Financial Assistance Program. 1040 nr ez Example 1. 1040 nr ez You received a scholarship of $2,500. 1040 nr ez The scholarship was not received under either of the exceptions mentioned above. 1040 nr ez As a condition for receiving the scholarship, you must serve as a part-time teaching assistant. 1040 nr ez Of the $2,500 scholarship, $1,000 represents payment for teaching. 1040 nr ez The provider of your scholarship gives you a Form W-2 showing $1,000 as income. 1040 nr ez Your qualified education expenses were at least $1,500. 1040 nr ez Assuming that all other conditions are met, $1,500 of your scholarship is tax free. 1040 nr ez The $1,000 you received for teaching is taxable. 1040 nr ez Example 2. 1040 nr ez You are a candidate for a degree at a medical school. 1040 nr ez You receive a scholarship (not under either of the exceptions mentioned above) for your medical education and training. 1040 nr ez The terms of your scholarship require you to perform future services. 1040 nr ez A substantial penalty applies if you do not comply. 1040 nr ez The entire amount of your grant is taxable as payment for services in the year it is received. 1040 nr ez Athletic Scholarships An athletic scholarship is tax free only if and to the extent it meets the requirements discussed later. 1040 nr ez Worksheet 1-1. 1040 nr ez    You can use Worksheet 1-1, Taxable Scholarship and Fellowship Income , later, to figure the tax-free and taxable parts of your athletic scholarship. 1040 nr ez    Worksheet 1-1. 1040 nr ez Taxable Scholarship and Fellowship Income 1. 1040 nr ez Enter the total amount of any scholarship or fellowship for 2013. 1040 nr ez See Amount of scholarship or fellowship, earlier. 1040 nr ez 1. 1040 nr ez       If you are a degree candidate at an eligible educational institution, go to line 2. 1040 nr ez If you are not a degree candidate at an eligible educational institution, stop here. 1040 nr ez The entire amount is taxable. 1040 nr ez For information on how to report this amount on your tax return, see Reporting Scholarships and Fellowships , earlier, in this chapter. 1040 nr ez       2. 1040 nr ez Enter the amount from line 1 that was for teaching, research, or any other services required as a condition for receiving the scholarship. 1040 nr ez (Do not include amounts received for these items under the National Health Service Corps Scholarship Program or the Armed Forces Health Professions Scholarship and Financial Assistance Program. 1040 nr ez ) 2. 1040 nr ez     3. 1040 nr ez Subtract line 2 from line 1 3. 1040 nr ez     4. 1040 nr ez Enter the amount from line 3 that your scholarship or fellowship required you to use for other than qualified education expenses 4. 1040 nr ez     5. 1040 nr ez Subtract line 4 from line 3 5. 1040 nr ez     6. 1040 nr ez Enter the amount of your qualified education expenses 6. 1040 nr ez     7. 1040 nr ez Enter the smaller of line 5 or line 6. 1040 nr ez This amount is the most you can exclude from your gross income (the tax-free part of the scholarship or fellowship) 7. 1040 nr ez     8. 1040 nr ez Subtract line 7 from line 5 8. 1040 nr ez     9. 1040 nr ez Taxable part. 1040 nr ez Add lines 2, 4, and 8. 1040 nr ez See Reporting Scholarships and Fellowships , earlier, for how to report this amount on your tax return 9. 1040 nr ez     Taxable Scholarships and Fellowships If and to the extent your scholarship or fellowship does not meet the requirements described earlier, it is taxable and must be included in gross income. 1040 nr ez You can use Worksheet 1–1, Taxable Scholarship and Fellowship Income, later, to figure the tax-free and taxable parts of your scholarship or fellowship. 1040 nr ez Reporting Scholarships and Fellowships Whether you must report your scholarship or fellowship depends on whether you must file a return and whether any part of your scholarship or fellowship is taxable. 1040 nr ez If your only income is a completely tax-free scholarship or fellowship, you do not have to file a tax return and no reporting is necessary. 1040 nr ez If all or part of your scholarship or fellowship is taxable and you are required to file a tax return, report the taxable amount as explained below. 1040 nr ez You must report the taxable amount whether or not you received a Form W-2. 1040 nr ez If you receive an incorrect Form W-2, ask the payer for a corrected one. 1040 nr ez For information on whether you must file a return, see Publication 501, Exemptions, Standard Deduction, and Filing Information, or your income tax form instructions. 1040 nr ez How To Report How you report any taxable scholarship or fellowship income depends on which return you file. 1040 nr ez Form 1040EZ. 1040 nr ez   If you file Form 1040EZ, include the taxable amount in the total on line 1. 1040 nr ez If the taxable amount was not reported on Form W-2, also enter “SCH” and the taxable amount in the space to the left of line 1. 1040 nr ez Form 1040A. 1040 nr ez   If you file Form 1040A, include the taxable amount in the total on line 7. 1040 nr ez If the taxable amount was not reported on Form W-2, also enter “SCH” and the taxable amount in the space to the left of line 7. 1040 nr ez Form 1040. 1040 nr ez   If you file Form 1040, include the taxable amount in the total on line 7. 1040 nr ez If the taxable amount was not reported on Form W-2, also enter “SCH” and the taxable amount on the dotted line next to line 7. 1040 nr ez Schedule SE (Form 1040). 1040 nr ez   To determine your net earnings from self-employment, include amounts you receive under a scholarship as pay for your services that are reported to you on Form 1099-MISC, Miscellaneous Income. 1040 nr ez If your net earnings are $400 or more, you must pay self-employment tax. 1040 nr ez Use Schedule SE, Self-Employment Tax, to figure this tax. 1040 nr ez Form 1040NR. 1040 nr ez   If you file Form 1040NR, report the taxable amount on line 12. 1040 nr ez Generally, you must report the amount shown in box 2 of Form(s) 1042-S, Foreign Person's U. 1040 nr ez S. 1040 nr ez Source Income Subject to Withholding. 1040 nr ez See the Instructions for Form 1040NR for more information. 1040 nr ez Form 1040NR-EZ. 1040 nr ez   If you file Form 1040NR-EZ, report the taxable amount on line 5. 1040 nr ez Generally, you must report the amount shown in box 2 of Form(s) 1042-S. 1040 nr ez See the Instructions for Form 1040NR-EZ for more information. 1040 nr ez Other Types of Educational Assistance The following discussions deal with other common types of educational assistance. 1040 nr ez Fulbright Grants A Fulbright grant is generally treated as a scholarship or fellowship in figuring how much of the grant is tax free. 1040 nr ez Pell Grants and Other Title IV Need-Based Education Grants These need-based grants are treated as scholarships for purposes of determining their tax treatment. 1040 nr ez They are tax free to the extent used for qualified education expenses during the period for which a grant is awarded. 1040 nr ez Payment to Service Academy Cadets An appointment to a United States military academy is not a scholarship or fellowship. 1040 nr ez Payment you receive as a cadet or midshipman at an armed services academy is pay for personal services and will be reported to you in box 1 of Form W-2. 1040 nr ez Include this pay in your income in the year you receive it unless one of the exceptions, discussed earlier under Payment for services , applies. 1040 nr ez Veterans' Benefits Payments you receive for education, training, or subsistence under any law administered by the Department of Veterans Affairs (VA) are tax free. 1040 nr ez Do not include these payments as income on your federal tax return. 1040 nr ez If you qualify for one or more of the education benefits discussed in chapters 2 through 12, you may have to reduce the amount of education expenses qualifying for a specific benefit by part or all of your VA payments. 1040 nr ez This applies only to the part of your VA payments that is required to be used for education expenses. 1040 nr ez You may want to visit the Veteran's Administration website at www. 1040 nr ez gibill. 1040 nr ez va. 1040 nr ez gov for specific information about the various VA benefits for education. 1040 nr ez Example. 1040 nr ez You have returned to college and are receiving two education benefits under the latest GI Bill: (1) a $1,534 monthly basic housing allowance (BHA) that is directly deposited to your checking account, and (2) $3,840 paid directly to your college for tuition. 1040 nr ez Neither of these benefits is taxable and you do not report them on your tax return. 1040 nr ez You also want to claim an American opportunity credit on your return. 1040 nr ez You paid $5,000 in qualified education expenses (see chapter 2, American Opportunity Credit , later). 1040 nr ez To figure the amount of credit, you must first subtract the $3,840 from your qualified education expenses because this payment under the GI Bill was required to be used for education expenses. 1040 nr ez You do not subtract any amount of the BHA because it was paid to you and its use was not restricted. 1040 nr ez Qualified Tuition Reduction If you are allowed to study tuition free or for a reduced rate of tuition, you may not have to pay tax on this benefit. 1040 nr ez This is called a “tuition reduction. 1040 nr ez ” You do not have to include a qualified tuition reduction in your income. 1040 nr ez A tuition reduction is qualified only if you receive it from, and use it at, an eligible educational institution. 1040 nr ez You do not have to use the tuition reduction at the eligible educational institution from which you received it. 1040 nr ez In other words, if you work for an eligible educational institution and the institution arranges for you to take courses at another eligible educational institution without paying any tuition, you may not have to include the value of the free courses in your income. 1040 nr ez The rules for determining if a tuition reduction is qualified, and therefore tax free, are different if the education provided is below the graduate level or is graduate education. 1040 nr ez You must include in your income any tuition reduction you receive that is payment for your services. 1040 nr ez Eligible educational institution. 1040 nr ez   An eligible educational institution is one that maintains a regular faculty and curriculum and normally has a regularly enrolled body of students in attendance at the place where it carries on its educational activities. 1040 nr ez Officers, owners, and highly compensated employees. 1040 nr ez   Qualified tuition reductions apply to officers, owners, or highly compensated employees only if benefits are available to employees on a nondiscriminatory basis. 1040 nr ez This means that the tuition reduction benefits must be available on substantially the same basis to each member of a group of employees. 1040 nr ez The group must be defined under a reasonable classification set up by the employer. 1040 nr ez The classification must not discriminate in favor of owners, officers, or highly compensated employees. 1040 nr ez Payment for services. 1040 nr ez   Generally, you must include in income the part of any qualified tuition reduction that represents payment for teaching, research, or other services by the student required as a condition of receiving the qualified tuition reduction. 1040 nr ez This applies even if all candidates for a degree must perform the services to receive the degree. 1040 nr ez (See below for exceptions. 1040 nr ez ) Exceptions. 1040 nr ez   You do not have to include in income the part of any scholarship or fellowship that represents payment for teaching, research, or other services if you receive the amount under: The National Health Service Corps Scholarship Program, or The Armed Forces Health Professions Scholarship and Financial Assistance Program. 1040 nr ez Education Below the Graduate Level If you receive a tuition reduction for education below the graduate level (including primary, secondary, or high school), it is a qualified tuition reduction, and therefore tax free, only if your relationship to the educational institution providing the benefit is described below. 1040 nr ez You are an employee of the eligible educational institution. 1040 nr ez You were an employee of the eligible educational institution, but you retired or left on disability. 1040 nr ez You are a widow or widower of an individual who died while an employee of the eligible educational institution or who retired or left on disability. 1040 nr ez You are the dependent child or spouse of an individual described in (1) through (3), above. 1040 nr ez Child of deceased parents. 1040 nr ez   For purposes of the qualified tuition reduction, a child is a dependent child if the child is under age 25 and both parents have died. 1040 nr ez Child of divorced parents. 1040 nr ez   For purposes of the qualified tuition reduction, a dependent child of divorced parents is treated as the dependent of both parents. 1040 nr ez Graduate Education A tuition reduction you receive for graduate education is qualified, and therefore tax free, if both of the following requirements are met. 1040 nr ez It is provided by an eligible educational institution. 1040 nr ez You are a graduate student who performs teaching or research activities for the educational institution. 1040 nr ez You must include in income any other tuition reductions for graduate education that you receive. 1040 nr ez How To Report Any tuition reduction that is taxable should be included as wages in box 1 of your Form W-2. 1040 nr ez Report the amount from Form W-2, box 1, on line 7 (Form 1040 or Form 1040A) or line 1 (Form 1040EZ). 1040 nr ez Prev  Up  Next   Home   More Online Publications
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The 1040 Nr Ez

1040 nr ez Publication 600 - Additional Material Table of Contents Please click here for the text description of the image. 1040 nr ez Electronic Filing (E-file) Please click here for the text description of the image. 1040 nr ez Electronic Filing (e-file) This image is too large to be displayed in the current screen. 1040 nr ez Please click the link to view the image. 1040 nr ez Electronic Filing (e-file) Please click here for the text description of the image. 1040 nr ez Electronic Filing (e-file) Prev  Up     Home   More Online Publications