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Do I have to pay tax on academic scholarships for college tuition and books?
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| With college costs climbing steadily upward nearly 8% per year many families
are particularly concerned about accumulating enough money to put their children through
college. College cost projections are continually increasing. Based on the latest averages from
The College Board and recent average annual college cost increases, a child who entered
kindergarten in 1998 will face four-year college costs of nearly $100,000 if he or she chooses to
attend a public college in 2012. For a private college, costs will probably be double
that. Students who receive
academic scholarships may exclude from taxable income on their tax return the amount required for
tuition, fees, books and supplies. However, they must report as taxable
income on their tax return any academic scholarship
funds used for other expenses, such as room and board.
Qualified academic scholarships and
fellowships are treated as tax free amounts on your tax return if all of the
following conditions are met:
 | the student is a candidate for a degree at an educational institution, |
| amounts the student receives as an
academic scholarship or fellowship are used for tuition and
fees required for enrollment or attendance at the college, or for books,
supplies, and equipment required for college courses of instruction, and |
| the amounts received
as an academic scholarship are not a payment for the students services, such as teaching other
students. |
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Related information about academic scholarships |
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American
Opportunity Tax Credit
Educational Assistance Exclusion
Education IRAs
Lifetime Learning Tax Credit
Qualified Tuition Programs
Student Loan Interest Tax
Deduction
U.S. Savings Bond Tuition Plans
Income Related Questions and Answers |
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IRS publications about academic scholarships and college:
For additional information on academic scholarships, scholarship and
fellowship grants, refer to Tax
Topic 421, and
IRS Publication 520, Scholarships and Fellowships. For further information or Higher Education refer
to
IRS Publication 970, Tax
Benefits for Higher Education;
IRS Publication 508, Educational
Expenses; and
IRS Publication
1577, Applying for Educational Financial Aid. Also see
IRS Publication 17, Your Federal
Income Tax. |
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Ask Julian Block your IRS and tax questions! |
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If you can't find the answer to your IRS or tax question in our
web you can call former IRS Special Agent and one of the country's foremost tax attorneys, nationally syndicated columnist ("The Tax
Adviser") Julian Block. Julian is also the tax Editor of Mutual Funds Magazine, America's premier investment magazine. To
call Julian for a tax consultation click
here. |
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