Pell Grant Tax Deductions
A Pell grant is aid money you receive to help pay for college if you qualify. Student aid, including loans, grants and most scholarships, are not considered income by the Internal Revenue Service, so money you receive is not taxable. In fact, you do not need to report Pell grant money on your tax returns, so there is no need to take a deduction.
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Pell Grant Basics
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The Pell grant is a federal need-based program designed to help low-income students pay for part of their schooling costs. In 2011, the maximum amount you could receive is $5,500 per year. Pell grant money is similar to scholarship money, in that you do not have to pay it back when you graduate.
Pell Grants and Filing
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If the only money you received over the past year came in the form of a Pell grant, most scholarships or other student aid, you will not need to file a tax return for that year. If you earned other money in addition to your Pell grant money, requiring you to report your income, you will not need to report your Pell grant money on your returns. If you do not have to report the money as income, there is no need to take a deduction.
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Taxable Student Income
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While student aid money is not taxable, there are certain types of income you can earn as a student that will require you to file a tax return and pay taxes. If you earn money on campus through a work-study program, your income is taxable, as it is if you earn money off campus either through self-employment or working for a company. Certain scholarships may also be taxable, according to the IRS (see Resources). If you earn a taxable income, you may be able to deduct some of your expenses.
Acceptable Education Deductions
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You may be able to deduct school-related expenses if you did not use Pell grant or other student aid money to pay for them. Expenses that qualify for a tax deduction include tuition, student activity fees and money you spent for books, equipment and school-related supplies. Room and board, transportation and insurance are not qualified deductions, according to the IRS.
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References
Resources
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