Form 1040 Line 1 - Taxable Scholarship Income

If the amount on Form 1040 U.S. Individual Income Tax Return Line 1 is more than the sum of your wages, this difference may be attributable to taxable scholarship income.

According to IRS Publication 970 Tax Benefits for Education, on page 6, if you file Form 1040 or Form 1040-SR U.S. Tax Return for Seniors, include the taxable amount in the total on Line 1. If the taxable amount was not reported on Form W-2 Wage and Tax Statement, 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:

  1. From within your TaxAct return (Online or Desktop), click Federal. On smaller devices, click in the upper left-hand corner, then click Federal.
  2. Click Education in the Federal Quick Q&A Topics menu to expand, then click Student Worksheet (tuition, scholarships).
  3. Click + Add Student Information to create a new copy of the form or click Edit to review a form already created.
  4. Continue with the interview process to enter all of the appropriate information.
  5. On the screen titled Student Information, select the applicable student from the Student drop-down, then click Continue.
  6. On the screen titled Student Information - Educational Institution, if the scholarship or grant amount is reported on Form 1098-T, select Yes to the question Did [student] receive Form 1098-T from this school for 2020?, then click Continue.
  7. On the screen titled Student Information - Education Assistance, enter the amount of the scholarship or fellowship in the applicable fields, then click Continue.
  8. 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 of Scholarship Income, you will see the Taxable scholarship income amount and/or total Tax-free scholarships, grants, etc. amount.

Note that any link in the information above is updated each year automatically and will take you to the most recent version of the document at the time it is accessed.