It depends on how the scholarship is used and the specific circumstances. Here’s a breakdown:
Not Taxable:
Scholarship funds are generally not taxable if they are used for qualified educational expenses, such as:
- Tuition and fees required for enrollment or attendance.
- Required course-related expenses, such as books, supplies, and equipment.
Taxable:
Scholarship funds are taxable if they are used for non-qualified expenses, such as:
- Room and board.
- Travel.
- Optional equipment.
- Other living expenses.
Key Points to Remember:
- If the scholarship is payment for teaching, research, or other services (e.g., a stipend for a teaching assistant), it is usually considered taxable income.
- Scholarships for students at degree-granting institutions are subject to these rules. Non-degree programs may have different regulations.
- You may receive a Form 1098-T or Form W-2, depending on how the funds are allocated.
For accurate tax reporting, consult the IRS guidelines or speak with a tax professional.
