The academic scholarship you received, which is designated for tuition and books, is not taxable income under certain conditions. According to the Internal Revenue Code and IRS publications, the following criteria must be met for the scholarship to be excluded from gross income:
- Candidate for a Degree: You must be a candidate for a degree at an eligible educational institution. This is specified in multiple excerpts, including Publication 970 and § 117 of the Internal Revenue Code.
- Qualified Education Expenses: The scholarship must be used for qualified education expenses. According to § 117(b) and various IRS publications, qualified education expenses include:
- Tuition and fees required for enrollment or attendance at the educational institution.
- Fees, books, supplies, and equipment required for courses of instruction at the educational institution.
Since your scholarship is designated for tuition and books, it falls under the category of qualified education expenses.
- Non-Compensatory: The scholarship must not represent payment for teaching, research, or other services. This is outlined in § 117(c) and reiterated in various IRS publications. If the scholarship is purely for educational purposes and not tied to any service requirement, it remains non-taxable.
Given that your scholarship is specifically designated for tuition and books, and assuming you are a degree candidate at an eligible educational institution, the scholarship is excludable from your gross income and is not taxable.
Sources:
Publication 970 (2023)
Publication 1380
Publication 4268 (8/2022)
§ 117. Qualified scholarships
LTR 8848031
CCA 200441029
