<p>Are financial aid taxed?
I'm really worried. Please enlighten me. Thanks.</p>
<p>Best to get tax advice from a tax professional.</p>
<p>Our experience has been that:</p>
<p>*Loan proceeds aren't taxable.
*Grant/scholarship proceeds exceeding the amount of tuition, fees, books, and required supplies are taxable.
*Work study income is taxable (but it doesn't count against you in next year's FAFSA)</p>
<p>Check out this thread to see if it answers any of the questions you have</p>
<p>Thanks for the link. However, I just want to clarify,
Does it mean that as long as the Pell Grant that I receive doesn't exceed the cost of attendance in that school, I don't (or my dad) doesn't have to pay taxes? But still need to mention it in filing the taxes, anyway? </p>
<p>I receive around 3,000 Pell Grant and 1500 Cal Grant. Total cost of attendance in the college I am attending is around 7,000.</p>
<p>No. Total Cost includes room & board, and grant/scholarship money applied to room & board (and miscellaneous expenses) isn't exempt from income tax.</p>
<p>You'll receive a 1099-T (or maybe it's a 1098-T) from the college documenting how much you received in grants, including the Pell and the CalGrant, which are disbursed by the school, and documenting how much your tuition and fees were. That info also goes to the IRS-- so make sure that your tax return matches the 1098-T.</p>