While scholarships are a significant benefit, the IRS considers certain portions taxable depending on how the funds are used. Because individual situations vary, we strongly recommend you consult a tax advisor to ensure you are reporting your scholarship correctly.

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The General Rule

• Tax-Free: Money used for "Qualified Education Expenses" (the essentials required for your classes).

• Taxable: Money used for "Incidental Expenses" (living costs and personal travel).

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What is Tax-Free vs. Taxable?

Non-Taxable Expenses (You do not pay taxes on these)

• Tuition: The cost of your credits and instruction.

• Required Fees: Enrollment or student activity fees required for all students.

• Required Books: Textbooks needed for your specific courses.

• Course-Related Supplies: Items like notebooks, pens, and paper.

• Required Equipment: Specific items needed for a class, such as lab kits, safety gear, or art supplies.

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Taxable Expenses (You must report these as income)

• Room and Board: This includes on-campus dorms, meal plans, or off-campus rent and groceries.

• Travel and Transportation: Gas, parking passes, or flights home for breaks.

• Research or Clerical Help: Any stipends paid for personal assistance or non-required research