Hi …I’m looking for some clarity on the tax implications of college scholarships. I’ve recently been awarded a scholarship for my studies, and I’m unsure if I need to worry about taxes on it.
From what I understand, some types of financial aid might be taxable, but I’m not sure if scholarships fall into that category. Can anyone explain if college scholarships are taxable and, if so, how I should handle it?
Scholarships above the amounts spent on tuition are considered taxable income. And you may be subject to the kiddie tax depending on how old you are, if your parents are alive, and how much else you made (seeing that you are “self-supporting”, maybe not).
This is pretty much the situation I was (and still am) in.
Will I incur penalties for failing to report them earlier?
Yes, and interest
how do I even go about saying “hey IRS, I just realized I owe $5000-$10000 in taxes on scholarship funds, can I pay those now?”
Amend your previous years’ returns, or if you didn’t file, you can file previous year returns
College scholarships are generally not taxable if used for qualified expenses like tuition, fees, and required course materials. However, funds used for non-qualified expenses, such as room and board, may be subject to taxes.
scholarship is tax-free
No, college scholarship are actually free and are non-taxable.