If the amount on Form 1040 Line 1 is more than the sum of your wages, this difference may be attributable to taxable scholarship income.
According to IRS Publication 970, page 6, if you file Form 1040 or 1040-SR, include the taxable amount in the total on line 1. 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 1.
If the student is being claimed as a dependent, and his or her educational expenses exceed the scholarship, grant, or fellowship amount, the education credit or deduction would be claimed on the return of the person claiming the student as a dependent. If the student is not claimed as a dependent, he or she would claim these expenses. Conversely, if the scholarship or grant amount exceeds the educational expenses, and there is taxable scholarship income to report, the dependent/student would need to report this income on their return.
Note. The TaxAct® program prevents taxable scholarship income from being transferred to Line 1 of the return if the scholarship income belongs to a dependent.
To enter or review your scholarship, grant, or fellowship income in the TaxAct program:
- From within your TaxAct return (Online or Desktop), click Federal. On smaller devices, click the menu icon in the upper left-hand corner, then select Federal.
- Click Education to expand the category and then click Student Worksheet (tuition, scholarships)
- Click +Add Student Information to create a new copy of the worksheet or click Review to review a worksheet already created. (If you are entering student information for the first time, you will be prompted to select the applicable student from the drop-down menu after you click Add, then click Continue.)
- Continue until you reach the screen titled Student Information - Educational Institution and enter the applicable information
- If the scholarship or grant amount is reported on Form 1098-T, select Yes to the question Did [student name] receive Form 1098-T from the school for 2019? Otherwise, click No. (If you had previously entered a Form 1098-T, you will instead be brought to the screen titled Tuition Statement - Summary, where you would click Review to review the entries, or Continue to pass this screen.)
- Continue until you reach the screen titled Student Information - Education Assistance. (If you entered scholarship or grant information on the Form 1098-T, you will see that amount has been transferred to this screen.)
- Enter the amount of the scholarship or fellowship in the applicable fields, then click Continue.
- On the following screens, you will need to enter the portion of that scholarship income that was used for the purposes mentioned on those screens.
On the screen titled Student Information - Summary, you will see the Taxable Scholarship Income amount and/or Total Tax-Free Assistance amount.