How is fully taxable scholarship and fellowship income reported?

Fully taxable scholarship and fellowship income is typically reported on a Form W-2. This is the correct manner of reporting such income because if the scholarship or fellowship is tied to employment—meaning the recipient is required to perform services in exchange for the payment—it is treated as compensation and thus considered taxable. In this case, the educational institution or organization providing the scholarship or fellowship would report this income through a Form W-2, similar to how they would report regular wages.

This form provides essential information for individuals when they are filing their taxes, as it outlines the income received and any withholdings. It's important for recipients to accurately report this income as part of their overall taxable income.

In contrast, other forms mentioned do not pertain to reporting fully taxable scholarships and fellowships. They serve different purposes: Form 1099-MISC is for miscellaneous income not associated with employment, Form 1099-R is for distributions from retirement accounts, and Form 1040 is the individual tax return form where all income is ultimately reported but does not directly report this specific type of income.