I received an academic scholarship that is designated for tuition and books. Is this taxable income?

Answer:

The scholarship isn't taxable income if you satisfy all of the following conditions:

  1. You're a candidate for a degree at an educational institution described in section 170(b)(1)(A)(ii) of the Internal Revenue Code.
  2. You use it to pay for:
    • tuition and fees required for enrollment or attendance at the eligible educational institution, and 
    • fees, books, supplies, and equipment required of all students for the courses of instruction at the eligible educational institution.
  3. The amount received doesn't represent payment for your services (unless the amount you receive is for services required by the National Health Service Corps Scholarship Program or the Armed Forces Health Professions Scholarship and Financial Assistance Program).