<p>I’ve been reading the tax laws regarding scholarships, but am confused about the service portion of that law.</p>
<p>In general if the scholarship is a form of payment for past, present or future services, it is taxable. This is understandable to avoid exploiting the loophole of getting paid in scholarships and avoiding taxes.</p>
<p>However, would a scholarship be taxable if it comes from a temple for being and active member? Would temple service be included in the “services” described above or are they excluded because temples are tax free organizations?</p>
<p>Being an active member of a temple is not providing a service. Attending “services” is not providing a service. Volunteering at the temple IS providing a service.</p>
<p>If the scholarship is for being an active member, as you say, it should not be taxable. If the scholarship is a form of payment for volunteering at the temple, it might be taxable.</p>
<p>If the scholarship is for being an active member, rather than payment for services, then it should not be taxable as long as it is used for qualified education expenses such as tuition and fees. If it is used for non qualified education expenses such as room and board it will, of course, be taxable income.</p>