IRS Pub.: Recipients of Taxable Scholarships Can Set Up IRAs (IRC §117)

Publication 970 revised to remind taxpayers that individual retirement accounts can be set up for those receiving taxable compensation, such as certain scholarships or fellowship grants, the IRS announced. A scholarship or fellowship grant is generally taxable compensation only if it is shown in box 1 of a taxpayer’s Form W-2, Wage and Tax Statement, the IRS provided. However, for tax years beginning after 2019, certain nontuition fellowship and stipend payments not reported on Form W-2 are treated as taxable compensation for IRA purposes, the IRS stated. These include amounts paid to aid in the pursuit of graduate or ...