Are Scholarships Taxable?
Happy Valentine’s Day! February is an excellent month to treasure your loved ones and your family’s finances.
Completing the Free Application for Federal Student Aid (FAFSA) is an important first step when figuring out how to pay for college. The new simplified 2024-25 FAFSA “soft launched” on Dec. 30 after a three-month delay and a bumpy start, but the new FAFSA form is now available. Students should submit the FAFSA to meet each college deadline, even though the Department of Education has reported another delay. The FAFSA information will now only be sent to colleges in March. Colleges will have a crunched timeline to send out award letters and may need to push out decision deadlines.
While scholarships are typically seen as free money, there are situations where they must be reported as taxable income. College students or recent graduates that received a scholarship may need to pay taxes on it. Understanding the potential tax implications on scholarships is an effective way to avoid surprises this tax season.
If you have any questions about filing the FAFSA, scholarships, or want help starting your family’s college funding plan, sign up for a complimentary consultation today!
Millions of College Students in Limbo After Aid Application Information Is Delayed Until March
U.S. colleges and universities won’t receive students’ applications for financial aid until at least early March, the Education Department said Tuesday.
The delay is the result of the department’s decision to fix an error in how students’ aid eligibility is calculated. The fix is intended to cover students entering college for the 2024-25 academic year.
Scholarships: Understanding the Tax Implications
As tax season unfolds, it’s important for college students and recent graduates to organize their financial documents and understand their potential tax obligations, especially if they have received a scholarship in the past year.
While scholarships are often perceived as “free money,” there are specific circumstances that may require reporting scholarships as taxable income.
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