If your child is fortunate enough to be awarded a scholarship, you may wonder about the tax implications. Fortunately, scholarships (and fellowships) are generally tax free for students at elementary, middle and high schools, as well as those attending college, graduate school or accredited vocational schools. It doesn’t matter if the scholarship makes a direct payment to the individual or reduces tuition. Requirements for tax-free treatment However, scholarships are not always tax free. Certain conditions must be satisfied. A scholarship is tax free only to the extent it’s used to pay for: Tuition and fees required to attend the school and Fees, books, supplies and equipment required of all students in a particular course. For example, expenses that don’t qualify include the cost of room and board, travel,...
