Question

The FAFSA says not to count fin. aid in the $ I report. But does this inc. aid that was used for unqualified expenses like rent? Also do I need to report $ in paypal?

Forum|Forum|4 years ago
April 3, 2022
1 reply
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My understanding is that I only don't report the financial aid that's paying for tuition, books, etc. And I imagine that Paypal counts as a "cash, checkings, or savings," account. But just want to confirm. Thanks.

TurboTax Online

DaveF1006

To clarify, what do you get paid for in the paypal account and how was the paypal money reported to you?

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A

ayudarmeAuthor

Thanks for getting back to me. I use Paypal for sportsbetting activity, which in addition to what's left of grants & scholarships after school expenses is how I've been supporting myself. Paypal records my transactions, of course, and I have Paypal statements; transfers from Paypal to my bank are recorded in my checking account. I assume Paypal counts as a "cash account," as defined by FAFSA. The leftover, taxable financial aid--which I use for rent, groceries, etc--seems like it might be treated differently than aid money paid to my school for tuition or used by me for books and supplies. I'm not sure if FAFSA makes a distinction. If they don't, then I would report the balance in my bank as 0, since the excess aid received ("financial aid refunds") would cover both my checking account and Paypal balances at the time the FAFSA was filed. If they do make a distinction (meaning that the extra aid should be treated like any other income), then I assume I would add what's in my bank and what's in Paypal and enter that. (I already submitted the FAFSA, so whatever the case I'd have to go in and make the necessary changes ASAP.) Sorry if that's a lot to sift through. I appreciate any and all insight, info, and advice.

Edit: Just as a clarification, the aid money isn't processed via Paypal. Only the other funds.

R

RobertB4444

@ayudarme You have a couple of different issues here.

If your financial aid is loans that have to be paid back then you don't need to enter it into your tax return at all. Get your 1098-T from the University and report the numbers from that. You do qualify for the education credits on your tax return even if it is loans that paid for school.

If the financial aid that you received is scholarships they will be reported on your 1098-T as well.

The 1099-K that you received from PayPal is taxable income, unfortunately. Winning money at gambling is taxable. You can report the gambling winnings on schedule C so that you can have it treated as a business and deduct your losses. However, you will have to pay self-employment taxes on the winnings that you have over and above your losses. Alternatively you can just report your winnings as other income but the deduction for losses is an itemized deduction at that point and may not be enough to offset the income.

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