Unearned income includes taxable scholarships and grants, as well as the earnings portion of a non-qualified distribution from a 529 plan.

Does a scholarship count as income?

Scholarship money is generally tax free provided you are a candidate for a degree at an eligible institution and use the money to pay for qualified expenses. The tuition and fees deduction has expired, but you may be eligible to deduct student loan interest from your taxable income.

Are scholarships considered earned income for kiddie tax?

Yes, the taxable scholarship money is considered unearned for purposes of the kiddie tax, but it is actually considered earned for purposes of calculating the standard deduction allowed under the kiddie tax computation.

Do you get to keep unused scholarship money?

One reason it’s so difficult is because most scholarship payments are sent directly to the school and are only allowed to be put toward tuition and fees. In most cases, the student doesn’t get to keep any leftover money for personal use, though some colleges do issue refunds, said Kantrowitz.

Is the money you get from a scholarship considered income?

A scholarship or grant you receive to help pay for education may or may not be considered income for tax purposes, depending on factors such as how you use the cash you receive. Cash you get from college scholarships, grants and fellowships is not considered taxable income if you meet a few basic qualifications.

Are there any scholarships that are not taxable?

Assume that the scholarships are themselves taxable, i.e. the money is not used for “qualified expenses” like tuition. This is more clearly defined in the EITC; for purposes of the Earned Income Tax Credit; then no, it is not Earned Income.

Is the scholarship not reported on the EITC?

This is more clearly defined in the EITC; for purposes of the Earned Income Tax Credit; then no, it is not Earned Income. See publication 596 , page 18 specifically: Scholarship or fellowship grants not reported on a Form W­2 .

Is the income from a fellowship grant taxable?

Any scholarship or fellowship grant that is used to pay for room and board, or something else that is not considered qualified tuition or a related expense, is taxable.