3/24/2023 0 Comments Qualified education expenses![]() However, the amount you used for housing and meals is taxable.Īlthough you may have been awarded Federal Work-Study to help pay for college, the money you earn at your work-study job must be reported as income just like any other employment earnings. So in the case of Pell grants, scholarships and fellowship grants, if your award covered tuition, housing and meals, the amount you use for tuition is tax-free. Qualified education expenses do not include the cost of housing, meals, travel, research, clerical help, equipment and other expenses that aren't required for enrollment. Just like a Pell grant, scholarships and fellowship grants are tax-free when used to fund tuition, enrollment fees and other qualified education expenses, which include expenses like fees, books, supplies and equipment that are required (of all students) for your courses. However, if you use the funds to pay for housing and meals, or even school-related travel expenses, then you must include the portion of the grant you used to pay these expenses in your taxable income. In order for a Pell grant to remain tax-free, you can only use the funds to pay for tuition, fees, books, supplies and equipment. ![]() That moment your FAFSA money becomes taxable We’ll also take a look at higher education tax credits and a deduction you should know about. Each financial aid award is treated a little differently, so we’ll aim to unpack each one. If you received financial aid in 2019, you may need to report those funds on your tax return depending on how you used the money.
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