College scholarships are a fork of financial aid that is awarded to students for the purposes of education, vocational training or research. The criteria for selection of students who will receive these scholarships are different, but they usually include: GPA, the year of study, the fact whether the student has failed a year or not, special talent, social status or belonging to a particular ethnic or social group.
College scholarships can be awarded to students who have just signed a particular college in the country or abroad, those who had a high GPA during the study, as well as graduates who wish to continue with their specialization (masters or doctoral studies). In addition, college scholarships may be intended for short study visits or stays abroad for learning foreign language or for the purpose of visiting seminars, conferences or workshops. Scholarships for students most commonly have material nature. The recipient of the scholarship is paid a certain amount of money every month or at other pre-arranged intervals. On the other hand, in most cases scholarship means covering the costs of tuition, accommodation, food and any other expenses during the study for students who are attending a college that is located outside of their place of residence. These expenses can be reimbursed completely or only to some extent. College scholarship providers can be both local and foreign legal entities. These providers are usually certain state departments, companies, banks, trusts, funds, universities and similar entities. Scholarships are very important because they provide an opportunity for students who have a talent and have good results, but don’t have sufficient funds to continue their education or training.
As we have mentioned before, college scholarships usually come in the form of a financial aid and they can often be counted as income. As you are probably aware all income must be taxed. Since there are cases of scholarships which should not be taxed it is certainly a good idea to check whether your award is taxable or not and what you can do to file a return.
The law is clear and there are few cases in which scholarships are tax free.
– If the award covers fees to enroll or attend an educational institution and tuition.
– If you are a part-time or full-time applicant for a degree at a primary secondary or accredited post-secondary institution.
– If the award covers, books, fees, supplies and equipment related and required for the classes.
The scholarship is always tax-free in these cases.
However there are situations in which college scholarships are taxable. College scholarship is taxable in cases when it is used to cover: travel, room and board, equipment, research and clerical help. Of course, there are situations in which some of your award is taxable and some of it is not. For example, if your award covers both tuition and research, the amount used for tuition is not taxable while the sum used for research is taxable. If your award or some part of your award is taxable you will have to file a form (1040EZ, 1040 or 1040A form).