I have a question regarding a tax free scholarship. Are scholarships tax free — How do I report a scholarship I received for education expenses?
A scholarship or fellowship is tax free, and you don’t need to report it if all of these apply:
- You’re a candidate for a degree at an eligible educational institution.
- You use the scholarship or fellowship to pay qualified education expenses.
You’re a candidate for a degree if you:
- Attend a primary or secondary school
- Pursue a degree at a college or university
- Attend an accredited educational institution authorized to provide a:
- Program that’s acceptable for full credit toward a bachelor’s or higher degree
- Program of training to prepare students for gainful employment in a recognized occupation
An eligible educational institution is one that:
- Maintains a regular faculty and curriculum
- Has a regularly enrolled body of students
Qualified education expenses include:
- Tuition and fees required to enroll at or attend an eligible educational institution
- Course-related expenses required of all students in your course of instruction. Expenses include:
Some grants are treated the same as a tax free scholarship and the amounts you use to pay for qualified education expenses are tax free. These include:
- Fulbright Grants
- Pell Grants
- Other Title IV need-based education grants
Loans you take out to pay for education expenses are tax free, too. Since you’ll repay the loan, the amount isn’t included in income.
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