Generally the following amounts from scholarships are not taxable:
1. Amounts received by a degree candidate that are used for tuition and fees required for enrollment, and fees, books, supplies and equipment required for courses.
2. Reduced tuition received by an undergraduate because the student or parent is a school employee, if the tuition program does not favor highly paid employees. Reduced tuition received by a graduate student performing teaching or research activities that does not represent payment for services.
3. Amounts received by degree candidates from National Health Service Corps or Armed Forces scholarship programs for tuition, fees, books, supplies and equipment, even if for services.
However, the following amounts from scholarships are taxable:
1. Amounts received by a student who is not a degree candidate.
2. Payment for services even if the grant is conditioned on the performance of services.
3. Any amount used for room, board or expenses other than tuition, fees and course requirements.
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