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All scholarships can be tax-free as long as they pay for Qualified Education Expenses and are not earmarked otherwise. You do not have to consider and Scholarships/Grants or Fellowships as Taxable Income if:
A scholarship or fellowship grant is tax free (excludable from gross income) only if you are a candidate for a degree at an eligible educational institution.
- It doesn't exceed your qualified education expenses;
It isn't designated or earmarked for other purposes (such as room and board), and doesn't require (by its terms) that it can't be used for qualified education expenses; and
It doesn't represent payment for teaching, research, or other services required as a condition for receiving the scholarship. For exceptions, see Payment for services, later.
Qualified education expenses. For purposes of tax-free scholarships and fellowship grants, these are expenses for:
Tuition and fees required to enroll at or attend an eligible educational institution; and
Course-related expenses, such as fees, books, supplies, and equipment that are required for the courses at the eligible educational institution. These items must be required of all students in your course of instruction.
https://www.irs.gov/publications/p970/ch01.html
All scholarships can be tax-free as long as they pay for Qualified Education Expenses and are not earmarked otherwise. You do not have to consider and Scholarships/Grants or Fellowships as Taxable Income if:
A scholarship or fellowship grant is tax free (excludable from gross income) only if you are a candidate for a degree at an eligible educational institution.
- It doesn't exceed your qualified education expenses;
It isn't designated or earmarked for other purposes (such as room and board), and doesn't require (by its terms) that it can't be used for qualified education expenses; and
It doesn't represent payment for teaching, research, or other services required as a condition for receiving the scholarship. For exceptions, see Payment for services, later.
Qualified education expenses. For purposes of tax-free scholarships and fellowship grants, these are expenses for:
Tuition and fees required to enroll at or attend an eligible educational institution; and
Course-related expenses, such as fees, books, supplies, and equipment that are required for the courses at the eligible educational institution. These items must be required of all students in your course of instruction.
https://www.irs.gov/publications/p970/ch01.html
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