A Pell Grant is showing in Box 5 on my 1098-T but from my understanding, Pell Grants don't need to be reported on tax returns. Can I just leave that box blank?

[ThomasM · Accepted solution]

No, don't leave the box blank.  Pell grants are not taxable if used for qualified education expenses.  It's listed in Box 5 of your 1098-T as an offset to your Box 1 or 2 figures, which are the amount of tuition & fees received/billed by your school.

That Box 5 amount gets subtracted from your education expenses -- if the total expenses are higher than the scholarships/grants figure, then you may qualify for a tax benefit (credit or deduction) on your tax return, and if the expenses are lower than the scholarships/grants, then that excess becomes taxable.

You'll enter the complete 1098-T form (all boxes) into TurboTax, along with any other expenses you paid (i.e books), and TurboTax will make the calculations for you.

Here's a link to IRS Publication 970, Tax Benefits for Education, which discusses all aspects of this topic:

https://www.irs.gov/pub/irs-pdf/p970.pdf