<a rel="nofollow" target="_blank" href="
https://www.irs.gov/pub/irs-pdf/p970.pdf">https://www.irs.gov/pub/irs-pdf/p970.pdf</a> see page 5 TIP and onward with some examples of creating income. Tax-Free Scholarships and Fellowship Grants 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.You may be able to increase the combined value of an education credit and certain educational assistance if the student includes some or all of the
educational assistance in income in the year it is received. See examples in Coordination with Pell grants and other
scholarships in chapter 2 and chapter 3
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