are scholarships taxable

When Are Scholarships Taxable?

The number of scholarships offered in America and the rest of the world is increasing every year to help more and more students get their college degrees. The increasing cost of college education has also forced almost all students to look for some kind of financial aid. Financial aid to students is available in form of scholarships, grants and loans. While almost every students is worried about when are scholarships taxable, most of the students looking for scholarships are unaware of the tax consequences of scholarship money they will get. The college aid office do provide guidance on taxability but good quality guidance on taxability is only available from tax professionals that obviously charge a fee for it. In this article I will throw some light on taxability of scholarships.

A scholarship can be taxable by tax authorities when it is regarded as your income. Scholarships can be regarded as your income depending on different factors. The first thing that will affect the taxability of scholarships is the purpose scholarships are awarded for. Scholarships that cover tuition fee or books are mostly tax free, and scholarships that are aimed at paying for living costs are generally taxable. If your scholarship covers both tuition and living costs your scholarships can be partially taxable.

Another factor that affects the taxability of scholarships is the awarding body of scholarships. If the scholarships are awarded by government they may be tax free even if they cover your living costs, accommodation, meals etc Scholarships awarded by private organizations and colleges are mostly taxable. However some organizations may have arranged a tax exemption for you from the government.

Another dimension to are scholarships taxable is the citizenship of the winning person. If the person is a non-citizen in America the scholarship may be taxable even if it covers tuition fee. International students who have won a scholarship can ask the scholarship provider for more information on taxability of their scholarships. Scholarship providers genrally help international students with tax matters.

Most of the time a student gets a scholarship, he will be notified whether he needs to file a tax return or not. The above article sets out general guide lines for taxability of scholarships. For more information students can search for websites by tax professionals that can help them understand tax consequences of their particular scholarship. There are a lot of sites on the internet that provide free guidance on tax matters.

Are Scholarships Taxable?-All About Tax Consequences of Scholarships

Getting scholarships and grants for higher education is fast becoming a necessity for many students due to rising costs of college education. More and more students are looking for scholarships and more scholarships are offered to students than ever before. Almost every student searching for a scholarship has a question in mind that is “are scholarships taxable?” This article provides some information about tax consequences of a scholarship.

The answer to the question “are scholarships taxable?” depends upon a number of different factors. The factors that affect the taxability are the type of scholarship, the awarding body, your citizenship, and what scholarship covers. All of the above factors will determine if your scholarship is considered as your income.

The type of scholarship is the first factor that affects taxability. Scholarships that are provided specifically to pursue a course or get education in a specific field or college are normally not taxable. The scholarships that require you to be enrolled on a part or full time course are also not taxable. Open scholarships which are paid directly in to your bank account or scholarships that does not attach any requirement as to enrollment in a course may be taxed.

Scholarships awarded by the government are always tax free; the question of taxability only arises when the scholarship provider is a private association or college, so if you are provided a scholarship by government you need not to worry about tax consequences.

Scholarships in all countries are awarded to citizens of the country or resident non citizens, as well as to international students. Your status in the country in which you get a scholarship affects the taxability. Normally scholarships paid to citizens are tax free and scholarships for non citizens or international students may be taxable either by the country you are studying in or your home country.

Scholarships that pay for the tuition fees, books, research and other educational expenses are generally not taxable. The scholarships that pay for room, food, laundry or any other part of living costs may be considered as your income in some countries and may be taxed. However, in cases where it is taxed, generally only part of scholarship that covers living costs will be taxed.

You can also contact your scholarship provider for information on taxability of your scholarship or you can contact any tax consultant in your area to discuss the taxability of scholarship you are being awarded.