Scholarships and Taxes
A scholarship is considered tax-free if you are a full-time or part-time candidate for a degree at a primary, secondary or accredited post-secondary institution, and the award covers tuition and fees to enroll in or attend an educational institution or fees, books, supplies and equipment required for your courses. If the total amount of scholarship awarded to you in a calendar year exceeds the amount of your tuition, fees, books, supplies and equipment, the excess amount is considered taxable income.
A scholarship is considered taxable if it is used to cover:
- Room and board
- Clerical help
- Non-course-related equipment
If your only income is a tax-free scholarship or fellowship, you won't have to file a tax return or report the award. However, you will have to report your scholarship to the Internal Revenue Service if any part of it is taxable and is not recorded on your W-2 form.
If you're not sure if your award is taxable, ask the organization that sponsored the award or contact the IRS at www.irs.gov or (800) 829-1040. You can also review Publication 970, an IRS publication available on their web site, which details scholarships and taxes.