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.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.