Heidi's scholarship included payment for teaching. What portion of her scholarship is taxable?

In this scenario, it is important to understand how scholarships are treated under tax law, especially in the context of teaching and related expenses. Generally, scholarships that cover tuition and fees are not taxable. However, any amount received for teaching or other services is typically considered taxable income.

Heidi's scholarship includes a teaching component, which indicates that a part of the funds is designated for services rendered (i.e., teaching). The taxable portion would be the amount that corresponds to this service, while any funds designated solely for tuition, fees, or course-related expenses would not be taxable.

In this case, if the total scholarship is $1,500 and the portion attributed to teaching is $1,000, then this would represent the taxable income. The remaining amount could potentially be allocated towards non-taxable expenses associated with her education, such as tuition and books.

Therefore, the correct answer reflects the portion of the scholarship that is associated with taxable income derived from Heidi’s teaching responsibilities. Understanding this distinction is crucial for accurately reporting scholarship income on tax returns.