If Vanessa received a $2,000 unrestricted scholarship from a local civic organization, how much of the scholarship would be taxable?

Answer 1

In the United States, scholarships and grants are generally not taxable as long as the funds are used for qualified education expenses. Qualified education expenses typically include tuition, fees, books, supplies, and required equipment. However, if any part of the scholarship is used for non-qualified expenses, such as room and board, that portion may be taxable.

Assuming Vanessa uses the entire $2,000 unrestricted scholarship for qualified expenses, then none of it would be taxable. However, if she uses any of the funds for non-qualified expenses, that portion may be considered taxable income.

It's always a good idea for Vanessa to consult with a tax professional or refer to IRS guidelines for student scholarships and grants to determine her specific tax obligations.