So you have received a grant or scholarship, congrats! Now for the question on everyone's mind: Are taxes going to deplete my "free money"?

According to the US Master Tax Guide, scholarships and fellowship grants are not considered income. Any amount of money which is received as a qualified scholarship is excluded from an individual's gross income, provided this individual is a candidate for a degree at a qualified educational organization. The organization must maintain a regular faculty, curriculum, enrollment, and activities.

What is a qualified scholarship? Any amount of money received by an individual as a scholarship or fellowship grant. This money must be used for tuition and it's related expenses. These related expenses include fees, books, supplies, and equipment which is required by a course. However, there are exclusions for qualified scholarships and tuition reductions. Payment for teaching, research, and other services performed by a student are not considered qualified scholarships. Your best bet? If you aren't sure ask!

Categories: Financial Aid | Grants | Scholarships
Tags: financial aid taxes gross income qualified scholarships tuition reduction

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