Reminders

Individual retirement arrangements (IRAs). You can set up and make contributions to an IRA if you receive taxable compensation. A scholarship or fellowship grant is generally taxable compensation only if it is shown in box 1 of your Form W-2, Wage and Tax Statement. However, for tax years beginning after 2019, certain non-tuition fellowship and stipend payments not reported to you on Form W-2 are treated as taxable compensation for IRA purposes. These include amounts paid to you to aid you in the pursuit of graduate or postdoctoral study and included in your gross income under the rules discussed in this chapter. Taxable amounts not reported to you on Form W-2 are generally included in gross income, as discussed later under Reporting Scholarships and Fellowship Grants . For more information about IRAs, see Pub. 590-A and Pub. 590-B. Higher education emergency grants. Emergency financial aid grants under the following are not included in your gross income.

• The CARES Act.

• The Coronavirus Response and Relief Supplemental Appropriations Act, 2021.

• The American Rescue Plan Act of 2021.

Also, for purposes of the American opportunity credit (see chapter 2) and lifetime learning credit (see chapter 3), a student does not reduce an amount of qualified tuition and related expenses by the amount of an emergency financial aid grant. For more information, see Higher Education Emergency Grants Frequently Asked Questions on IRS.gov.