If I used a portion of my Pell Grant for unqualified expenses, how do I report this as taxable income?

Forum|Forum|2 years ago
March 8, 2024
2 replies
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My grant exceeded my tuition costs, and the excess was refunded by the school. How do I claim this as taxable income, since it was used for non-education expenses?

TurboTax Free Edition Online

KrisD15

You should have received a 1098-T with the amount over expenses in Box 5.

Regardless, the taxable income is entered under

Deductions and Credits

Education

Bypass the information from Form 1098-T if you are not entering one, until you get to a screen that asks for scholarships not already reported on your return.

Enter the taxable amount here.

The taxable amount will flow to Schedule 1 line 8r.

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useryodacrunchyAuthor

I did enter a 1098-T. So to clarify, since I already entered a 1098-T with Box 5 "scholarships or grants" in excess of box 1, I have technically reported the taxable income and do not have to enter it anywhere else?

Hal_Al

Employee

Q. Since I already entered a 1098-T with Box 5 "scholarships or grants" in excess of box 1, I have technically reported the taxable income and do not have to enter it anywhere else?

A. Yes. To verify that that happened look a line 8r on Schedule 1. That is where the taxable amount of scholarship is entered on the forms. From there, it transfers to line 8 of form 1040.

Hal_Al

Employee

The total Pell grant is usually already included in box 5 of the 1098-T. When you enter your 1098-T, TurboTax (TT) will subtract the box 1 amount (and any additional books, computer and other course materials that you enter) to determine the taxable amount of the scholarship.

If you had any grants, not already included in box 5, TT will ask about those after entering the 1098-T.

If your parents are claiming a tuition credit based on your 1098-T, on their return, you should eventually reach a screen called "Amount used to calculate education credit". Verify the amount in that box is $4000. That will reduce your qualified expenses and make $4000 more of your scholarship taxable.

For more detail, see: https://ttlc.intuit.com/community/college-education/discussion/re-how-can-i-add-scholarships-and-grants-as-taxable-income/01/3244892#M55014