How to Claim Federal Pell Grants on Taxes

Save
Claiming Federal Pell Grants on Your Taxes
Claiming Federal Pell Grants on Your Taxes (Image: tax forms image by Chad McDermott from Fotolia.com)

The federal Pell Grant Program provides need-based financial assistance to undergraduate and some post-baccalaureate students. As long as the money is used for school expenses (tuition and course-related costs) while in attendance at a participating post-secondary institution, the grant is not taxable and does not need to be reported. To the extent the funds are not used for education, they must be declared as income. How you report the money on your income tax return depends on which form you file.

Use line 21 on Form 1040 to enter the amount of the grant not used for education expenses. If this amount was not reported on a Form W-2, write “SCH” on the dotted line next to line 21.

Use line 1 on Form 1040EZ. Follow the same procedure as in Step 1.

Use Schedule SE if more than $400 is taxable. If so, you will have to pay self-employment tax on the money. The IRS considers Pell Grant money used for non-educational purposes as pay for your services as an independent contractor.

Tips & Warnings

  • The IRS treats Pell Grant money and other need-based grants as scholarships for determining their tax treatment. The methods of reporting described above are consistent with this treatment, but apply only to grant money not used for tuition or course-related expenses.

Related Searches

References

Promoted By Zergnet

Comments

You May Also Like

Related Searches

Check It Out

4 Credit Myths That Are Absolutely False

M
Is DIY in your DNA? Become part of our maker community.
Submit Your Work!