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June 4, 2019
Question

My pell grant and gi bill paid my school tuition. Can I still claim the tuition as an expsense?

  • June 4, 2019
  • 1 reply
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1 reply

June 4, 2019

No. You cannot claim a deduction for an expense you did not pay yourself.

Hal_Al
Employee
June 4, 2019
Maybe. There is a tax “loophole” available. But veterans & active duty usually can't use it because their tuition is paid directly by GI benefits.

 The student reports all his scholarship, up to the amount needed to claim the American opportunity credit, as income on his return. That way, the parents  (or himself, if he is not a dependent) can claim the tuition credit on their return. They can do this because that much tuition was no longer paid by "tax free" scholarship.  You cannot do this if the school’s billing statement specifically shows the scholarships being applied to tuition or if the conditions of the grant are that it be used to pay for qualified expenses.

Using an example: Student has $10,000 in box 5 of the 1098-T and $8000 in box 2. At first glance he/she has $2000 of taxable income and nobody can claim the American opportunity credit. But if she reports $6000 as income on her return, the parents can claim $4000 of qualified expenses on their return.

For most veterans; their Pell grant is already taxable, because it is used for room & board and other living expenses.