Are athletic scholarships considered earned income since services must be preformed? Is this taxable income?
Athletic scholarships are not considered earned income even though they require the recipient to perform services (play sports). An analogy can be made to academic scholarships that require the recipient to maintain a certain GPA. It takes “work” to maintain the GPA, but the scholarship is not considered earned income. However, any scholarship that covers room and board is taxable unless excludable by treaty. For additional information, see Publication 970, Tax Benefits for Higher Education.
