The Tax Reform Act of 1986 specifies that scholarship amounts granted for expenses incurred are taxable income, if the aggregate scholarship amounts exceed tuition and fees (not including room and board), books, supplies, and equipment required for courses of instruction at an eligible institution.
Any general scholarship or grant aid that is received in a calendar year may be regarded as first applying toward excludable expenses (i.e., tuition, required fees, and required books, supplies, and equipment) even though family resources, loans, or student employment may, in fact, have initially paid those expenses. You should retain records (e.g., copies of relevant bills, receipts, checks) to document your excludable expenses. If you receive general scholarship or grant aid in excess of the cost of tuition, fees, and books, the excess amount is taxable. In addition, specific scholarships or grants (e.g., health insurance grants) that are directed toward expenses other than tuition, fees, and books are subject to taxation.
Other forms of financial aid—including loans and student employment—are not covered by these provisions of the tax law. Earnings from student employment, of course, are taxable as wages, as is any summer stipend you may have received from the college. If you had any campus earnings during 2019, a W-2 form was issued by the Williams College payroll department and is available to download from your Williams Human Resources account. If you had a taxable summer stipend, a 1099 was issued by the Williams College Controller’s Office.
This worksheet will help you determine the amount of taxable scholarship or grant aid you may have received in 2019. Note that the terms referred to are for the spring and fall semesters of 2019, not the fall and spring semesters of 2019-20. If you no longer have copies of your award notice(s) that cover these periods, you can view (and print) them from your Williams Student Records account (Finances > View Financial Aid).
Also note that the information used in preparing Form 1098-T, related to tuition tax credits, is for billed tuition and scholarship and grant aid applied to your student account during calendar year 2018. You should not use Form 1098-T to calculate your taxable scholarship and grant aid.
If you are a U.S. citizen or permanent resident completing an income tax return and you had taxable scholarship and grant aid, enter the amount of taxable aid to the left of the entry box for “wages, salaries, and tips” with the annotation “SCH” – for example, “SCH $5,000.” Include this amount with your wages, salaries, and tips in your entry for line line 1 in Form 1040.
For further information, you may find IRS publication 970, Tax Benefits for Education, useful. Information, forms, and publications are also available from the IRS Web site, www.irs.gov, or by calling 800-829-3676. In addition, the IRS has a toll-free number, 800-829-1040, to provide help in completing tax returns.
The Family Educational Rights and Privacy Act is a federal law that protects the privacy of student education records. The law applies to all schools that receive funds under an applicable program of the U.S. Department of Education.
Impact of Drug Conviction on Federal Financial Aid Eligibility
Under the Higher Education Act, a student may become ineligible for federal student aid if convicted of possession and/or the sale of illegal drugs while enrolled as a student and receiving federal aid. Additional information can be found on this information sheet.
Most male students must register with Selective Service in order to receive federal student aid. If you are a male (age 18-25) and not registered with Selective Service, select Register Me while completing your FAFSA and Selective Service will register you. You can also register over the Internet at www.sss.gov.
If you believe that you are not required to register with Selective Service, you should call the Selective Service office at 1-847-688-6888 for information regarding exemptions or visit the Selective Service Web site at www.sss.gov.
Social Security Number
The U.S. Department of Education verifies your Social Security Number (SSN) as reported on your FAFSA against your records on file with the Social Security Administration (SSA). If the SSN you report exactly matches the number on your Social Security card but you receive a FAFSA rejection error stating it does not exactly match your records on file with the SSA, you must contact the SSA at 1-800-772-1213.
We verify the financial aid application of every student applying for aid. Verification is a federal review process by which we compare information from your FAFSA with your federal income tax information and other financial documents.
Your taxable income must be verified by using the FAFSA’s IRS Data Retrieval Tool or by comparing it to an IRS tax transcript. The IRS Data Retrieval Tool allows you and your parent(s) to upload data from your filed federal tax returns at the time you complete your FAFSA. It’s fast and easy; therefore, you are strongly encouraged to use the IRS Data Retrieval Tool.
If you choose not to use it, you must manually enter this income information into your FAFSA and submit an IRS tax transcript. It can take several weeks for the IRS to process your request, which will delay the processing of your financial aid application. We cannot issue your financial aid award without it.
We verify your untaxed income using your CSS Financial Aid PROFILE, federal income tax return, income tax statements (i.e., Forms W-2, 1099-SSA, 1099-MISC, etc.), and the Federal Verification Worksheet. If we need additional documentation, we will request it at the time we review your FAFSA.
The federal verification process may require us to make corrections to your FAFSA, in which case you will be notified by the U.S. Department of Education. Corrections will be denoted by an asterisk on your online FAFSA.
If you apply only for a Federal Direct Loan and the federal processor randomly selects your FAFSA for verification, you may be required to submit supporting documentation. We will contact you directly if documentation is needed.