If you've won a scholarship, grant or fellowship, congratulations are in order! You'll surely want to share the great news with Mom, Dad, Grandma...and Uncle Sam.
Wait…what?
Because, your scholarship, grant or fellowship may count as income; and, if so, that means that it's taxable. We've compiled a guide to help you decipher which category your educational award falls under - taxable or tax-free.
Additionally, if your award is taxable, we've included instructions in order to help you figure out how to claim it on your taxes.
• You are a full-time or part-time candidate for a degree at a primary, secondary or accredited post-secondary institution.
• The award covers tuition and fees to enroll in or attend an educational institution.
• The award covers fees, books, supplies and equipment required for your courses.
The award is tax-free only as long as you use it for the purposes outlined above.
• Travel
• Research
• Clerical help
• Fees, Books, Supplies and Equipment (Not required for the course or attendance)
If your award covered both tuition and room and board, the amount you use for tuition is tax-free. However, the amount you used for room and board is taxable. Remember, if you need to make this adjustment, you may have to adjust other parts of your return as well. For example, if you are filing a deduction for educational expenses, you must reduce the amount of your deduction by the tax-free amount of the award. Note: Items that are required for your course or for course attendance are generally not taxable.
Tax-Free Scholarships, Fellowships & Grants
A scholarship is tax-free if:Taxable Scholarships, Fellowships & Grants
Your scholarship is taxed if it was used to cover any of the following: • Room and board• Travel
• Research
• Clerical help
• Fees, Books, Supplies and Equipment (Not required for the course or attendance)
If your award covered both tuition and room and board, the amount you use for tuition is tax-free. However, the amount you used for room and board is taxable. Remember, if you need to make this adjustment, you may have to adjust other parts of your return as well. For example, if you are filing a deduction for educational expenses, you must reduce the amount of your deduction by the tax-free amount of the award. Note: Items that are required for your course or for course attendance are generally not taxable.
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