Mar 27, 2008

Q & A: Work Study Grants as Income

QUESTION: Part of the funding for my campus job last year came from a federal work-study grant while the rest of it was covered by the department I worked for. Since the work-study money came from the government, is it taxable? The sources of funding weren't broken down at all in the W-2 I received from the university and when I entered this information into the tax software I was using, I didn't see any place to put in information about work-study grants. Do you have any insights on this?

ANSWER: Work-study grants are considered exempt income if the following conditions are met:
1. You are a candidate for a degree at an educational institution,
2. Amounts you receive as a scholarship or fellowship are used for tuition and fees required for enrollment or attendance at the educational institution, or for books, supplies, and equipment required for courses of instruction, and
3. The amounts received are not a payment for your services.
The grant amount should not be included on your W-2. The W-2 form should represent only your earnings from the institution for services rendered.

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