It's not something we tend to think about while our teens apply for and win scholarships. But it is something you should at least be aware of. When your teen has college scholarships, then in January of your teen's college years they will receive a 1098-T from their college. (It may not be mailed to your kid. It might only be found in the school's tax documents section of their college financial portal. So be sure to look.)
It's not a complicated thing. But here's the gist of it. (READ THE REST HERE.)
(NOTE: This information is for educational purposes only. Consult with your financial advisor or CPA for how you should handle your specific circumstances.)
Usually, scholarships that cover "qualified educational costs" are not taxable. But your opinion and that of the federal government of what qualifies may be different. Generally only course-related expenses such as tuition and fees, but it can include other items such as books, and equipment needed....