If a student receives a college scholarship from a non-profit organization is that taxable?

If it's used for eligible college expenses, it's not taxable. If it's used for other expenses, yes it's taxable. For example, amounts used for room and board are taxable.

See IRS publication 970 for more info.

Taxable Scholarships and Fellowships

If you received a scholarship or fellowship, all or part of it may be taxable, even if you did not receive a Form W-2. Generally, the entire amount is taxable if you are not a candidate for a degree.

If you are a candidate for a degree, you generally can exclude from income that part of the grant used for:

* Tuition and fees required for enrollment or attendance, or

* Fees, books, supplies, and equipment required for your courses.

You cannot exclude from income any part of the grant used for other purposes, such as room and board.

A scholarship generally is an amount paid for the benefit of a student at an educational institution to aid in the pursuit of studies. The student may be in either a graduate or an undergraduate program.

A fellowship grant generally is an amount paid for the benefit of an individual to aid in the pursuit of study or research.

Example 1

Tammy Graves receives a $6,000 fellowship grant that is not designated for any specific use. Tammy is a degree candidate. She spends $5,500 for tuition and $500 for her personal expenses. Tammy is required to include $500 in income.

Money actually used for college tuition, etc., is not taxable. Money that is not used or is used for personal expenses is taxable.

no