How to Report a Pell Grant I Received on My Federal Taxes

Pell Grants must be reported if they are used for nonqualifying expenses.

A Pell Grant refers to money given to college students by the federal government based on financial need. In order to qualify for a Pell Grant, students must complete the Free Application for Federal Student Aid (FAFSA) and be deemed to have enough financial need. Pell Grants do not have to be repaid. As long as you use the money from the Pell Grant for qualifying expenses, it is not taxable. However, if you do use the funds for nonqualifying expenses, you must include that portion in your taxable income.

Things You'll Need

• Tax forms (1040, 1040A or 1040EZ)

Instructions

1. Determine the amount of your Pell Grant that was not used for qualifying educational expenses. Qualifying educational expense include tuition and required fees and supplies. For example, if you have a $5,000 Pell Grant and you only paid $4,000 in tuition and fees, you would have $1,000 in taxable income.

2. Add the taxable amount of your Pell Grant to any other taxable income you have and report the total on line 1 of Form 1040EZ or line 7 of Form 1040A or Form 1040.

3. Write "SCH" next to line 1 or line 7 (depending on the form you are using) to denote that the money not accounted for on your W-2 forms is from a Pell Grant.

References

• IRS: Publication 970
• IRS: Taxable Income For Students
• Federal Student Aid: Federal Pell Grant