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I am an international student, and last year I won a scholarship offered by a national newspaper. I received Form 1099-MISC from this newspaper, and the amount of my scholarship appears in Box 3 of this form.
Also, I received Form 1098-T from an organization which gave me a scholarship to attend a summer program in Washington DC. The amount of this scholarship appears in Box 5 of this form.
In the past I have always used form 1040NR EZ to file my taxes, but this year I do not know which form I should use because I have received the aforementioned scholarships.
Should I still use form 1040NR EZ and report all of my scholarship money in line 5, or should I use a different form?
Some important points:
All of the money I received was used for tuition.
I am not from a country that has a tax treaty with the US.
You will need to file Form 1040NR for 2007, because the income from the Form 1099-MISC has to be reported on Line #21 of Form 1040NR as "Other income".
Sorry, even though the money is being used for tuition, under U.S. tax law, it IS taxable income.
Thank you so much for your quick response, Atlanta Tax Expert! Now, do I have to use shcedule C to file this information or do I just enter the amount of my shcolarship on line21?
My other question is where do I enter the addional scholarship info that was given to me on the 1098T form.
The income reported in box 3 of 1099-Misc is taxable. The income in box 5 of 1098-T, may not be taxable if you meet the requirements.
This is for everyone--resident or nonresident; tax treaty or no tax treaty:
If you are a degree candidate and if the financial aid (includes scholarship and fellowship) is for tuition fee, other fees, books, supplies and equipment, then it is not taxable. For a degree candidate aid for boarding and travel are taxable.
If you are not a degree candidate, then all the financial aid is taxable.
You must use Worksheet 1-1 in Chapter 1 of Publication 970 to figure out the taxable amount.
Scholarship and fellowship grants not reported on Form W-2 are included in your wages income. Also, enter “SCH” and the amount on the dotted line next to line 7 of Form 1040 (or line 1 of 1040EZ or line 7 of 1040A). However, if you were a degree candidate, include on line 7 only the amounts you used for expenses other than tuition and course-related expenses. For example, amounts used for room, board, and travel must be reported on line 7.
Any "SCH" amount that you put on line 7 of Form 1040 is subject to employment taxes at 15.3%. Include amounts you receive under a scholarship as pay for your services as an independent contractor in determining your net earnings from self-employment. If your net earnings are $400 or more, you will have to pay self-employment tax. Use Schedule SE, Self-Employment Tax, to figure this tax.
Publication 970 - Tax Benefits for Education - Tax Benefits for Education; Chapter 1--Scholarships, Fellowships, Grants, and Tuition Reductions.
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