Tax-Free Scholarships and Fellowships
A scholarship or fellowship is tax-free if:
1) you are a candidate for a degree at an educational institution, and
2) the grant is a qualified scholarship or fellowship.
The term "candidate for a degree' means a student (full or part-time) who attends a primary or secondary school or is pursuing a degree at a college or university, or attends an accredited educational institution that is authorized to provide a program that is acceptable for full credit towards a bachelor's or higher degree, or a program of training to prepare students for gainful employment in a recognized occupation.
Qualified scholarship or fellowship is any amount a student receives as a scholarship or fellowship grant that is used for tuition and fees to enroll in or to attend an educational institution, or to purchase books, supplies, and equipment that are required of the courses at the educational institution a student plans to attend. These items must be required of all students in the course of instruction.
A scholarship or fellowship can still qualify as tax-free even if the terms do not provide that it be used only for tuition and course-related expenses. It will qualify if you use the grant proceeds for tuition and course-related expenses. However, if the terms of the grant require its use for other purposes, such as room and board, or it specifies that it cannot be used for tuition or course-related expenses, the amount(s) received under the grant are not tax-free.
Pell Grants, Supplement Education Opportunity Grants, and Grant to States for State Student Incentives are tax-free if they are used for qualifying tuition and course-related expenses during the grant period.
Scholarship Prizes are cash won in a contest and are not scholarships if you do not have to use the prize(s) for educational purposes. These prizes are taxable regardless of how you use the money. A scholarship prize that you can use only when enrolled as a candidate for a degree at a college is a qualified scholarship.
Additional Information
If you have any doubt about the tax treatment of your scholarship, consult with the organization(s) that you receive the scholarship from. They may have received advice from the IRS about the appropriate tax treatment of the award. You can also contact the District Director of the IRS for the district in which you reside. Be sure to ask for the information as soon as possible so that you can receive an answer in time to file a return, if necessary. You may also call the IRS at 1-800-829-1040 or 1-800-829-4059 for the hearing impaired.
Publications and Forms
To order free publications and forms, you can call 1-800-829-3676 or write to the IRS Forms Distribution Center nearest you. If you are surfing the net, you can get forms and other information at www.irs.ustreas.gov.
For a list of free tax publications, order Publication 910 "Guide to Free Tax Services." It contains an index of tax topics and related publications and describes other free tax information.
If you have questions about if your scholarship is tax-free,
you can call 1-800-829-1040.
LATE APPLICATIONS WILL NOT BE ACCEPTED.
APPLICATIONS MUST BE TYPED OR PRINTED. |
ACF scholarship and financial aid awards are available ONLY to New Mexico residents and to those meeting specific criteria. Application deadlines vary between March and July. Awards begin with the fall semester.
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QUESTIONS? Call the Foundation Office at (505) 883-6240
or e-mail us at foundation@albuquerquefoundation.org
