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scholarship questions

  • 1.  scholarship questions

    Posted 7 days ago
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    Two questions regarding scholarships. 1. Is there a specific IRS code/document I can reference to explain that donors cannot select recipients? 2. What have others seen regarding employees of your organization being taxed on scholarships they receive for degree programs (the scholarship program has specific criteria for employees only and an internal selection committee so it doesn't seem to meet the IRS criteria for tax free individual grants). Those that I have spoken with that don't tax seem to be below the $5,250 threshold on non-scholarship tuition reimbursement. Does that indeed come into play in your experience? Just trying to figure out why auditors say it should be taxed while other organizations I speak with don't seem to be following that.

    Thanks all.



    Terry W. Younglove

    Director of Operations and Communications

    847-618-4262 office


    Northwest Community Hospital Foundation
    3040 West Salt Creek Lane, Arlington Heights, IL 60005

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  • 2.  RE: scholarship questions

    Posted 7 days ago
    The IRS regulations are more directed toward "donor control" issues generally.  Not scholarship selection specifically, although there are numerous court cases where the IRS has ruled against a deduction when a donor has directed funds to a specific student.

    See IRS Publication 526 regarding gifts to specific individuals.  And search the aasp downloads for the "donor control" topic.

    As for taxation of certain funds provided to students, see IRS Publication 970 - Tax Benefits for Education.  It explains what is taxable and what is not.  Note that the rules have changed over the years, mainly depending on which political party is in office.  I recall when I was working on my graduate degree back in the 1990s at Duke that for a few years, my employee education benefit was taxable, and for a few years, it wasn't.  The change occurred when a different political party was in office and changed the tax rules.


    John H. Taylor
    John H. Taylor Consulting, LLC
    2604 Sevier St.
    Durham, NC   27705
    919.816.5903 (cell/text)

    Serving the Advancement Community Since 1987