Is your scholarship taxable?

This time of year, many students are wondering if their Jeannette Rankin Foundation scholarships should be reported on their tax returns. It depends. A scholarship is tax free if it was used to cover essentials like tuition, fees, supplies and books. But, if your scholarship paid for incidental or living expenses, you’re required to report it.

According to IRS Publication 520:
“An amount you receive for incidental expenses is not a tax-free qualified scholarship. Incidental expenses are expenses for items that are not required for either enrollment or attendance at the educational institution. Incidental expenses include room and board, travel, research, clerical help, and equipment. If all or part of your scholarship is taxable and you are required to file a tax return, you must report the taxable amount.”

That’s the answer in a nutshell, but you should talk to a tax professional if you have a detailed question. Check out this site if you want to do more research on your own.