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Your scholarship, fellowship or grant may be tax-free

Your scholarship, fellowship or grant may be tax-free

Scholarship, Fellowship or Grant may be Tax-Free

If you received a scholarship, fellowship or grant payment for a degree (whether an undergraduate or a graduate) at an educational institution to aid in the pursuit of your studies, it’s generally tax-free if you meet certain conditions:

  • You are a candidate for a degree at an educational institution.  The educational institution maintains a regular faculty and curriculum. The institution typically has regularly enrolled students in attendance at the place where it carries on its educational activities
  • The amounts you receive are used to pay for tuition and fees required for enrollment or attendance at the educational institution, or for fees, books, supplies, and equipment needed for courses

You must include the following items in gross income: 

  • Amounts used for incidental expenses, such as room and board, travel, and optional equipment.
  • Amounts received as payments for teaching, research, or other services required as a condition for receiving the scholarship or fellowship grant.  However, you don’t need to include in gross income any amounts you receive for services that are required by the National Health Service Corps Scholarship Program, Armed Forces Health Professions Scholarship and Financial Assistance Program or specific comprehensive student-work-learning-service programs operated by a work college.

The Interactive Tax Assistant can help you check for eligibility.

Supposing that you also qualify for an education credit, you may be able to get a more substantial credit by choosing to include some or all of the scholarship, fellowship or grant in income.  Should you have questions you can call us at 561-293-3135 or email us at info@fasttaxhelp.org.  If you did not claim this tax credit but should have, we can assist you with filing an amended return. Contact Us for more information.

For more information, read Publication 970, Tax Benefits for Education.