Payments made using the Segal AmeriCorps Education Award are subject to federal tax in the year each payment is made. It is considered taxable income regardless of whether it is used to pay current educational costs or to repay qualified student loans.
Payments made for interest accrued during the term of service are also subject to income taxes in the year the payment is made. Interest payments are made on your behalf for the interest that accrued during your service term. These payments are made in addition to your education award and are not subtracted from your award balance.
Any amount of the education award used and any interest payments made, may impact your annual income tax responsibility.
- If you use the entire amount of your education award in one calendar year, you must include the entire amount as income on your taxes for that year.
- If you redeem only a portion of your education award in a calendar year, you are responsible for any taxes owed on that portion.
- If you do not use any of your award in a particular year, you do not include any part as income.
- All interest payments made on your behalf should be included as income in the year the payment was made.
The Trust DOES NOT withhold taxes from your education award or interest payments. If your education award and interest payments total more than $600 in a calendar year, CNCS will send you an IRS Form 1099 to be used in preparing your income tax return. All education award and interest payments made on your behalf are considered taxable, even if they do not total $600. You can review all of your payments under Account Statements on your My AmeriCorps account.
The living allowance amount you receive during service is also considered taxable income in the calendar year in which you receive it. For example, if you receive a portion of your living allowance in 2016 and the rest in 2017, the portion received in 2016 is subject to 2016 income taxes, and the portion received in 2017 is subject to 2017 income taxes.
You will receive a W-2 form indicating the allowance amount you earned. Most AmeriCorps State and National members receive W-2s from the sponsoring organization. VISTA and AmeriCorps NCCC members receive W-2 forms from CNCS.
While you are responsible for taxes on your education award and other AmeriCorps benefits, you may be eligible for other tax relief through the Taxpayer Relief Act of 1997. For more information, contact a tax professional or the Internal Revenue Service.
IRS Publication 970, Tax Benefits for Education explains tax benefits that may be available to taxpayers who are paying for higher educational costs or repaying student loans. AmeriCorps members who use the education award and have interest payments made on their behalf, may be eligible for such deductions.