StatePoint MediaLater legislation has specified portions of a scholarship could be taxed if it is considered “fees for services.” Everyone knows about scholarships. They’re no-strings-attached money to help students pay for their higher education. Right? Usually, but not always. In some cases, there are significant strings attached – including situations in which scholarships are treated as taxable income. While unusual, it’s important for students, their families and scholarship providers to understand all the implications. Tax status The tax status of scholarships first codified in 1954 was simple: for students pursuing a degree, all scholarships, fellowships and grants were tax-free. But later legislation specified portions of a scholarship could be taxed if
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