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Under some circumstances grants and scholarships MAY be classified as taxable income.
A scholarship or fellowship grant is tax free (excludable from gross income) only if you are a candidate for a degree at an eligible educational institution.A scholarship or fellowship grant is tax free only to the extent:-- It does not exceed your expenses;-- It is not designated or earmarked for other purposes (such as room and board), and does not require (by its terms) that it cannot be used for qualified education expenses; and-- It does not represent payment for teaching, research, or other services required as a condition for receiving the scholarship.
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