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This is kind of a question, but I am wondering about paying

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Hi! This is kind of...
Hi! This is kind of a long question, but I am wondering about paying taxes on Pell Grants. It was explained to me that you ONLY had to pay tax on Pell Grant monies received that were OVER your qualified tuition and related expense cost. (IE, School cost $4000, but you rcv $4500 in PG, then you would pay tax on the $500) Anyway, my husband's school included the total amount of grants received on the 1098T they sent us. Do I have to claim that entire amount, or only what was over his school expenses?
Submitted: 5 years ago.Category: Tax
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Answered in 8 minutes by:
2/1/2012
Tax Professional: rramsook, Enrolled Agent replied 5 years ago
rramsook
rramsook, Enrolled Agent
Category: Tax
Satisfied Customers: 307
Experience: Specialize in Individual,Corporate, and payroll tax matters.
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rramsook :

Hello, In order to figure out the amount you have to claim you will have to take the tuition expense on form 1098-T and subtract the amount of grants you received. The net amount will be the number that you will report on your tax return.

JACUSTOMER-3c7j74rm- :

That doesn't make any sense to me....the amount listed in box 2 is less than $300, and his expenses were well over $8000. It's like they used his loan money instead of Grant money to pay for tuition/fees

rramsook :

If your tuition is more than your scholarship and grants amounts then you do not have to pay taxes on the grants. To report the tuition costs for the deduction you will have to take your tuition cost less grants and scholarships received.

JACUSTOMER-3c7j74rm- :

Right, I get that. I just don't want to get in trouble with the IRS, because the amounts listed on the 1098T completely screw me tax-wise, when his tuition/fees were between $8-10K for two semesters, and they have only a couple hundred listed on the form, and then all the grants listed so we have to pay taxes on it, when we should be able to count that towards tuition, etc., as long as it is under the amount paid. Does what I'm saying make sense?

rramsook :

so your saying that his grants were more than whats listed on the form?

JACUSTOMER-3c7j74rm- :

no, the grant amount listed is correct, but Box 2, which lists "amounts billed for qualified tuition and related expenses" is WRONG, by several thousand dollars. Do we just have to subtract the difference ourselves, and enter that in the amount for scholarships/grants, or do you have to pay tax on it regardless?

rramsook :

You will have to contact your institution to notify them of the error because a copy of that 1098-T went to the IRS, so if your numbers on your return doesn't match what the IRS has on file that will cause a problem. I recommend you contact your school and have them fix the error and issue and amended 1098-T showing the correct amounts.

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rramsook
rramsook
rramsook, Enrolled Agent
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Satisfied Customers: 307
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Experience: Specialize in Individual,Corporate, and payroll tax matters.

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