Whether or not scholarships are taxable depends on how the scholarship funds are used. In general, scholarships that are used for tuition, fees, books, and supplies are not taxable. However, scholarships that are used for non-educational expenses, such as room and board, travel, or personal expenses, may be taxable.
If you receive a scholarship that is not used for tuition, fees, books, or supplies, you will need to report it on your tax return as taxable income. You may be able to claim an education tax credit, such as the American Opportunity Tax Credit or the Lifetime Learning Credit, to offset the tax liability on the scholarship income.
It’s important to consult with a tax professional or refer to IRS guidelines to determine whether your scholarship is taxable and how to report it on your tax return.
