 However, scholarships that involve the transfer of money to the student do need to be reported and taxed.If the student is a nonresident for tax purposes, the scholarships are reported using Form 1042-S and tax is withheld at 14% if the student has a SSN or Individual Taxpayer Identification Number, and at 30% otherwise.The student must report the tax on Line 12 of the Form 1040NR and use it in calculating his or her tax liability.