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Scholarship or fellowship grants are excludable from income if you are a degree candidate, and the amounts received are for tuition, fees, books, supplies, or equipment required for courses. Room and board do not qualify. If you receive payments for services, they must be included in your taxable income even if such services are required of all candidates for the degree. However, amounts paid for teaching or research by the National Health Service or armed forces scholarship programs are not taxable.
Veterans' Administration payments are not taxable. Qualified tuition reduction for undergraduates, or tuition waivers or reductions for graduate students engaged in teaching or research activities, are not taxable.
If you received taxable money under a grant, you must report it on Line 7 of your 1040 form, whether or not it was reported on a W-2 form.