Undergraduates & Graduates
Filing as a U.S. Citizen or Resident Alien
This page is for any undergraduate and graduate students filing as a U.S. Citizen or Resident Alien.
*If you are filing as a Non-Resident, please go to our ‘Non-Resident’ tab for more info.
Scholarships, Fellowships, Grants, and Stipends
The IRS counts ALL scholarships, fellowships, grants or stipends as taxable income if it was NOT used to pay for qualified expenses (ie: tuition, required books).
If Box 5 on your 1098-T is greater than Box 1, you likely have taxable income. More information on what is taxable can be found here: Taxable Income. However, if Box 1 is greater than Box 5, you have qualified expenses and may be eligible for an Education Credit (see below for more info).
Only financial aid allocated towards tuition and books are considered tax-exempt. See here for more information: Tax-Exempt Scholarships
If you are unsure of what scholarships or grants are taxable, the IRS has a free online tool that can help determine if you may be subject to tax: Do I Include My Scholarship, Fellowship, or Education Grant as Income on My Tax Return?
Quarterly Estimated Tax Payments
If you have scholarship income, we recommend you make quarterly estimated tax payments. This is because scholarship income does not have any amount that is withheld for federal and state tax, thus at the end of the year will be taxed for the full amount. By making quarterly payments for both federal and state, you can reduce how much you pay when you file your taxes the following year.
Payments can be made during four quarterly periods:
| Payment Period | Due Date |
|---|---|
|
January 1 – March 31 |
April 15 |
|
April 1 – May 31 |
June 15 |
|
June 1 – August 31 |
September 15 |
|
September 1 – December 31 |
January 15 of the following year |
Note: If these due dates fall on a Saturday, Sunday or legal holiday, the payments are due the next business day.
For more information, these resources provide information about estimated payments:
Qualified Expenses
The good news is, if you have any qualified expenses, the IRS will allow you to deduct that amount from any scholarship income you have. This will lower your taxable income and thus reduce any taxes you have to pay:
- Undergraduates: As long as the the books and materials were required for the course, the amount can be deducted from your taxable income.
- Graduates: We are only able to deduct required materials and books if they were bought from UCLA, and not if you bought from a third-party seller. The only exception to this is if the course or UCLA directed you to a third-party seller to buy the necessary materials.
Education Credits
If the amount in Box 1 is greater than Box 5, then you have education expenses and thus can claim Education Credits. Any additional qualified expenses can increase your education expenses and thus your education credit amount. Students may claim one of the two credits available:
- American Opportunity Credit: This is a refundable credit students may claim during their first four years of higher education. Undergraduates will usually claim this credit.* ** ***
- Lifetime Learning Credit: This is a nonrefundable credit that any can claim after the first four years of higher education. Graduate students will usually claim this credit. Because this is a nonrefundable credit, it can only reduce any other other tax you may owe from wages or other sources of income.
*The maximum amount you can claim from the AOTC is $2,500 and the maximum refundable amount is $1,000.
**Although a normal bachelor degrees is four academic years, it is counted as five tax calendar years. When students begin their first year during the fall, they are counted as a full-time student and can claim the AOTC if they choose to do so.
***If a student is required to file their own return and is being claimed as a dependent, the credit will be claimed by whoever is reporting Form 1098-T.