Scholarships are a very much sought after form of financial aid. Why? They don’t have to be paid back! Scholarships also may take on a significant meaning for a student, it may be they excelled academically, athletically, as a leader, etc.
But are scholarships taxable income? Generally, scholarships are tax free. If you have questions, be sure to inquire with a tax professional.
A scholarship is generally tax free if the money is not payment for past, present, or future teaching, or used for research. As long as the money is used for tuition and it’s related fees. Related fees include college fees, textbooks, supplies, and equipment. If the student is a candidate for degree the money is normally tax free.
It is possible for part of a scholarship to be taxable. If money is used for room and board, travel, and other non tuition or course related fees. Also, it is possible for scholarships to be taxable if they are used for occupational training or continuing education programs.
Your best best? If you don’t know….ask!
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