If you receive a scholarship or fellowship grant, all or part of the amounts you receive may be tax–free.

Qualified scholarship and fellowship grants are treated as tax–free amounts if all 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.

Included in gross income are amounts used for incidental expenses, such as room and board, travel, and optional equipment, as well as amounts received as payments for teaching, research, or other services required as a condition for receiving the scholarship or fellowship grant.

If any part of your scholarship or fellowship grant is taxable, you may have to make estimated tax payments. For more information refer to Tax Topic 355 or to Publication 520 (PDF), Scholarships and Fellowships.

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