The Segal AmeriCorps Education Award, unlike most other scholarships and fellowships, is subject to federal tax in the year you have funds sent from your National Service Trust account to a school or lender. (If you use your award in 2013, you'll report it on the taxes you file by April 15, 2014.)

  • The end-of-term VISTA cash stipend is also subject to taxes.
  • When the National Service Trust pays interest off on your student loans, the amount paid is also considered taxable income.

How Much Do Members Pay?

Alumni pay additional taxes when they use their Education Award. Since each person has a different tax scenario, this is not a set amount.

You may still receive a tax refund, but it will be reduced by the amount of tax paid on the Education Award. You can calculate your education award tax with an online tax service. Note: if you start a job in the $30-40,000 annual pay range directly out of service, you risk bumping up into a higher tax bracket when using your Education Award. To help avoid this, check out Tax Strategies below.

What is the Process for Paying This Tax?

In January, you will receive a 1099-Misc form showing the amount of interest and education award payments that were made on your behalf the previous year, if the total payments exceeded $600. You can also download this from your My AmeriCorps account. This is an income-reporting form that you use when filling out your taxes. NOTE: Unlike other types of employment income, you can NOT  withhold a sum from your Education Award and use it to pay taxes.

If I use $600 or less from my award, do I pay taxes?
If you use $600 or less, a 1099-MISC form will not be created for you. However, according to the IRS, you are still obligated to report any amount withdrawn from your Trust account as income on your taxes. Even if it's only $5.

What if I made a mistake and paid too much in taxes?
There have been cases in which members have reported their Education Award as income in a year BEFORE they actually used it and paid taxes twice. If this happens to you, you can amend your tax return and get a refund. This has to happen within three years of overpaying the taxes. Learn more at the IRS website.

Tax Strategies

Did you know that the interest you pay on student loans is often tax deductible? Did you know that you can get tax credits when going to school? Learn more by typing keywords "deducting student loan interest" and "education tax credits" into a search engine. 

Note: To receive your deductions or credits, you need to use Tax Form 1040. The EZ form will not allow you these options.

If you are concerned about paying tax on your Education Award, you can choose to use it over multiple tax years. For example, use half your Education Award in one year and the other half in the next year. 

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