What are the community foundations tax reporting requirements in connection with scholarship assistance? What are the tax consequences to the student who receives scholarship aid?
Under current IRS practice, community foundations making grants for scholarships have no tax-reporting requirements except to the extent that such payments represent compensation for services provided by the recipient. To the extent that the scholarship grant pays for costs other than tuition, fees, or books, supplies and equipment required for study at a tax-exempt institution, a student may be liable for income taxes on the grant, but it is not the community foundation’s responsibility to provide tax advice to its grantees. Indeed, because it will be hard to know each individual’s circumstances fully, it would be irresponsible and unwise to offer such advice.
Related Questions
- If a student meets the academic eligibility requirements for a HOPE Scholarship, is the student guaranteed admission to a college or University at which the student can use the scholarship?
- What academic requirements must a HOPE Scholarship student meet to continue to receive the scholarship?
- What if a students only source of income is a scholarship? Isn that exempt from tax?
