How do you declare taxes if you are a graduate student on a fellowship?

Be careful. Keep your receipts. If you did not use up that fellowship and grant money for tuition, books, lab fees, and a few other qualifiers, you will have to report the unused portion in income. Are you a first year student? You may be able to claim the Hope credit. However, you should claim the Lifetime Learning credit. For 2007, you can have up to 2500.00 of credit. For 2007, the Hope credit is 1650 dollar-for-dollar off of your income tax liability on Line 49 of your Form 1040. You cannot claim both credits for the same student.

If you use software, you may see some of it placed on Line 49, Education credits and some of it placed "above the line" in Educator Expenses, Line 23 of the 1040. "Above the line" means knocked down into a lower tax bracket. "Below the line" means dollar-for-dollar knocked off of your actual income tax. You may use up your credit, and the software will automatically prorate it, up to what you can legally take. You cannot claim the amount you borrowed. You can claim interest up to a limit once you begin paying the loan back. By the way, that's subject to phase-out based on gross income as are the credits. You don't have to worry about that this year; you didn't make enough.

http://www.irs.gov/publications/p970/ch0...

http://www.irs.gov/faqs/faq-kw85.html...

http://www.irs.gov/publications/p970/ch0...

http://nextaxpro.spaces.live.com/

Read IRS publication 970, chapter 1. Any money not spent on tuition is taxable income to you. Any money for being paid to teach a class is taxable even if you spend the money on tuition.

Add to line 7, label SCH $xxx.