I received scholarships & grants above the value of tuition for the current academic year. Non-tuition scholarships = $8000 & pell grant = $680, for a total of $8680. I was wondering, is pell grant is taxable? Under what conditions? I googled it and the answer seems to be yes, but I want to be sure that there aren’t any exceptions. If it isn’t taxable, I have enough non-tuition academic expenses (books/lab fees/lab supplies) to subtract so that the taxable amount lies under the $6200 limit, which would allow me to not file my own tax return. Thanks.
Pell applied to tuition is not. Books are not so you can take that out of non tuition scholarships.
http://www.finaid.org/scholarships/exemptions.phtml
http://www.finaid.org/scholarships/taxability.phtml
Also there is nothing wrong with filing.
Subtract the cost of tuition, mandatory fees and required books and supplies paid in 2014 from the total amount you received in 2014 for scholarships and grants. That is the taxable amount. Pell grants are treated the same as any other scholarship or grant money, the amount above the qualified education expenses I listed above is taxable.
If the Pell is bringing you just above $6200 then you need to file a return. If you had any taxes withheld from a job, you’d want to file anyway.
How much did you pay for tuition, fees, books,amd required materials in 2014? How much in schoalrship and Grant money did you receive.
Subtract the money you paid in expenses from your scholarship amount.
What is the balance? Add that balance to any other income you earned. If the total is over $6200, then you must file.
Here’s the reference on the Pell grant being treated like other scholarships/grants: the bottom of page 6 in IRS Pub 970:
Looks like I must include the Pell grant, so I’ll prepare to file. 
Thanks for the responses.
I have a question about FAFSA EFC though…I filed without factoring this into the equation, but will fix it once I nail down my exact academic expenses for the spring/buy supplies.
So far though, my FAFSA looks the same as last year’s -except for the fact that my family will have 2 in college instead of 1. It seems the EFC was multiplied by .6…isn’t it .5 for FAFSA? I’m concerned because this lowered the Pell amount I expected for next year, based on Fafsa4caster. Thanks.
See post #1 of FAFSA Help: Putting in scholarships, grants, etc. on FAFSA - Financial Aid and Scholarships - College Confidential Forums
I don’t think you are looking at this right. It doesn’t matter that you got more than $6200 in grants, including pell. What matters is how much your QEE is (tuition, fees, books). If that number is more than your $8680,then none of it is taxable. If it is less, some of that $8680 may be taxable.
I’m not following that completely but understand that any books/supplies you buy now for spring will be QEE for 2015, not 2014. Same with any other QEE you pay now for spring instead of having paid in 2014. School years and tax years are different and what matters for taxes is the tax year when expenses were paid.
Are you a freshman? Pay attention to when grants/scholarships are credited to your account and when expenses were paid. You may only have half as much taxable scholarships/grants for 2014 as you are thinking you have.
twoin, I think the OP demonstrated in her previous posts that she understands it’s only scholarships/grants in excess of QEE that are reportable.
@twinanddone My tuition and basic fees are covered by a combination of a full-tuition award & the Cal Grant A, which aren’t included here. From the $8680 above that value, around $2000 go to books/lab fees/lab supplies, leaving a taxable amount of ~$6680…
@4kidsdad I know the EFC will change once I include the scholarship money on FAFSA, but I was wondering why it was higher than expected without taking those into account…Maybe I should’ve started a new thread for that, sorry for the confusion…
Without considering my scholarships/taxes/etc. (basically, a big blank $0 for everything student-related)…
Fafsa4caster showed an EFC of ~$3300, with a Pell of $2380. However, the actual Fafsa gave me one of ~$4100, with a Pell of $1580. Is this normal/expected?
I know this will change once I input the student scholarships/taxes/etc, but I was wondering why it’s lower now & don’t want that to carry over if it’s a mistake.
@annoyingdad Oooh I hadn’t thought about that, I have to divide the aid by 2 and include only fall expenses for taxes…Thanks!
Again, check your account and see what year scholarships/grants were credited to your account.
Your school may provide you with a form 1098-T this month. Either mail it or make it available online. That will show what they billed you in 2014 and what scholarships/grants they credited to you in 2014. That’s a starting point for determining any taxable amount. You can add books/supplies bought in 2014(keep receipts) to the billable costs they show on the 1098-T. Just be aware that the 1098-Ts sometimes don’t match up with actual account records.
For 2015 you will be looking at this coming spring and next fall for 2015 taxes.
Fafsa4caster is not FAFSA. You can compare FFafsa4caster with FAFSA. My last post:
@4kidsdad Ahhh sorry, I misread that earlier! Well that puts my mind at ease. Thanks.
Hmm so the calculator isn’t too reliable, it seems…However, I’m still concerned as to how it compares w/last year’s FAFSA.
2014-2015 EFC: 7189
one kid in college
2015-2016 EFC: 4130
same financials, 2 kids in college
Shouldn’t the EFC be divided by 2 this year, if all financial info remains the same? I know it seems petty, but a bit extra of Pell would be helpful, if I can qualify for it. I don’t mind working extra hours this summer to make up for the difference, but I wanna be sure that the calculation’s correct.
Your EFC = Parents’ Contribution + Student’s Contribution . With 2 kids in college, Parents’ Contribution will be divide by 2, the Student’s Contribution does not. See http://ifap.ed.gov/efcformulaguide/attachments/090214EFCFormulaGuide1516.pdf
@4kidsdad I see, but the student contribution = 0 (no income/assets/etc.)…The EFC = only the parent contribution in this case We qualify for the simplified formula (skip assets question) btw. This is purely income driven, which is constant, so all the more confusing…Maybe I should forget about it/stop splitting hairs, I guess.
^You may want to go though the formulas.
FAFSA formula for 2014-2015: http://ifap.ed.gov/efcformulaguide/attachments/091913EFCFormulaGuide1415.pdf
FAFSA formula for 2015-2016: http://ifap.ed.gov/efcformulaguide/attachments/090214EFCFormulaGuide1516.pdf
@4kidsdad Hmm the 2015-16 worksheet gives a $3864 EFC for the upcoming year…I give up lol. Thanks for the help.
I thought the EFC with two in college was multiplied by .6, not .5, but @thumper1 might know for sure. Maybe that’s only for private colleges using the CSS profile…
The parent contribution to EFC for fafsa is halved. The student contribution to EFC will vary depending on the income and assets of the student. Yes, for institutional aid it’s thought that schools that use profile or their own form generally are in the neighborhood of .6.