Are Scholarships Taxable?

Are Scholarships Taxable?

The answer is possibly. Scholarships can be partially tax-free, while some of the funding is considered . It depends on how the funds are allocated.

If you are a full or part-time working toward a degree at an eligible educational institution, including primary, secondary or post-secondary schools, then your scholarship is likely tax-free. There are certain that the scholarship or fellowship can be used for in order to remain tax-free. scholarships must be applied to tuition, fees, books, supplies, and required equipment for your courses.

Your scholarship is taxable if you used any part of it for room and board, , research, clerical equipment, or other similar expenses. However, only the portion used for these expenses is considered taxable, as the amount used for tuition remains tax-free.

You don't have to file a if your scholarship is tax-free and it was the only you had for the year.

Pell and Fulbright Scholarships are often treated similarly when determining the amount that is tax-free. As long as they are used for qualifying educational expenses, Pell, Title IV and other need-based grants, are generally tax-free. Benefits given to veterans, like educational payments, trainings, or assistance are tax-free and do not need to be reported as income when filing a return.