I received an academic scholarship that is designated to be used
for tuition and books. Is this taxable?
Qualified scholarships and fellowships are treated as tax-free amounts
if all of the following conditions are met:
You are a candidate for a degree at an educational institution,
Amounts you receive as a scholarship or fellowship are used for tuition
and fees required for enrollment or attendance at the educational institution,
or for books, supplies, and equipment required for courses of instruction,
and
The amounts received are not a payment for your services.
For additional information on Scholarship and Fellowship Grants, refer
to Tax Topic 421, and Publication 970, Tax Benefits
for Education .
7.4 Child Care Credit/Other Credits : Hope & Life Time Learning Educational Credits
If I pay college tuition and fees with a scholarship, can I claim
an education credit on Form 8863 for those payments?
No. You cannot claim a credit for the amount of higher education expenses
paid for by tax-free scholarships.
If the amount of qualified tuition and fees I pay is greater than
the amount of my scholarship, should I fill out Form 8863? If I cannot use
Form 8863 because I received a scholarship, what can I do?
You must reduce the qualified expenses by the amount of any tax-free educational
assistance. Do not reduce the qualified expenses by amounts paid with the
student's earnings, loans, gifts, inheritances, and personal savings. Also,
do not reduce the qualified expenses by any scholarship reported as income
on the student's return or any scholarship which, by its terms, cannot be
applied to qualified tuition and related expenses.
