Can I Claim School Fees Even if I Got a Pell Grant?

Students who receive Pell grants may be able to deduct their educational expenses.

The Internal Revenue Service allows students to deduct certain expenses for tuition and fees on their income tax returns. Generally, those who claim these expenses must pay their own school expenses to qualify for this deduction. However, those who receive non-taxable financial assistance, such as a Pell grant, may qualify to deduct their school costs if they exclude the assistance they received.

Tuition and Fees Deduction

Taxpayers who use the tuition and fees deduction can claim up to $4,000 in qualified education expenses. They can then subtract the amount of their eligible expenses from their total income, reducing the amount of taxable income they report. To claim this deduction, school expenses must consist of tuition or fees for enrollment at a higher-education institution. Living expenses or dormitory costs do not qualify as eligible education expenses.

Pell Grant

The Pell grant is a yearly federal grant the federal government issues to low-income students who demonstrate financial need. The maximum amount a student can receive varies by year. For the 2011 academic year, students could receive up to $5,550 in Pell assistance. Students are not required to repay the Pell grant or to claim it as income on a tax return.

How a Pell Grant Affects the Deduction

Those who receive a Pell grant can still claim the tuition and fees deduction if there are qualified expenses they paid out of their own pockets. To arrive at the correct amount, they must add up their tuition and fees for the tax year, then subtract the total amount of their Pell grant assistance. The students can then claim the remainder of their education expenses for purposes of the deduction.

Claiming the Tuition and Fees Deduction

To claim the tuition and fees deduction, taxpayers must complete Form 8917: Tuition and Fees Deduction. Once they arrive at the amount of their deduction, they transfer the total to either Line 19 of Form 1040A or Line 34 of Form 1040. They then subtract the total deduction from their gross income.

References

• IRS.gov; Publication 970 (2010): Tax Benefits for Education
• U.S. Department of Education; Federal Pell Grant Program
• Federal Student Aid; Federal Pell Grant
• IRS.gov; Form 8917 (2010): Tuition and Fees Deduction
• IRS.gov; Form 1040 (2010): U.S. Individual Income Tax Return
• IRS.gov; Instructions for Form 1040 (2010)