<p>The Pell Grant is taxable just like any other grants/scholarships to the extent they exceed the cost of tuition, mandatory fees and required books and supplies. If the total income, including work, taxable scholarships/grants, interest etc., of a student who can be claimed as a dependent on their parents’ return is less than $6100, the student wouldn’t have to file a return/owe any federal tax.</p>
<p>There is a question on fafsa asking the amount of grants/scholarships that was reported to the IRS. That amount is subtracted from income in the fafsa formula. Also, any amount in a savings account that is attributable to prior financial aid doesn’t have to be included in student assets.</p>