Taxes on Pell Grants?

The amount of the tuition paid to the college is over $700 different than the actual Pell grant award. Turbo tax is trying to add it to my income. The problem is that I didn't receive the money. I received two checks for approximately $40. Why should I claim $700 that I didn't receive?

Answer:

I am not a tax expert, so I cannot give advice about taxes. All I can tell you is what the IRS says, which is that Pell grants are treated like scholarships for tax purposes. That means that they are tax free to the extent they are used for qualified education expenses, during the period for which a grant is awarded.

Qualified expenses are not only the amounts paid for tuition. If you are in a degree program, these expenses are also tax-free (as long as they are required for all students in the course):

• fees


• books


• supplies


• equipment

If you did not receive the amount back that you should have from your school, go to your financial aid office and ask them to go through your account with you and explain how the Pell grant was applied.

You could always try different tax software and see if it does the same thing, or not. Taxact (a non-affiliate link) is also a well-known brand.