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mm3
New Member

Can i receive a refund if for the year of 2018 I was a full time student and received pell grants to pay for education ?I was enrolled in a one year certificate program.

 
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Hal_Al
Level 15

Can i receive a refund if for the year of 2018 I was a full time student and received pell grants to pay for education ?I was enrolled in a one year certificate program.

Yes, possibly, if you are over age 23*.

There is a tax “loophole” available. The student reports all his scholarship, up to the amount needed to claim the American opportunity credit, as income on his return. That way, he can claim the tuition credit on his return. He can do this because that much tuition was no longer paid by "tax free" scholarship.  You cannot do this if the school’s billing statement specifically shows the scholarships being applied to tuition or if the conditions of the grant are that it be used to pay for qualified expenses.

Using an example: Student has $10,000 Pell Grant in box 5 of the 1098-T and $8000 in box 2. At first glance he/she has $2000 of taxable income and  can not claim the American opportunity credit. But if he reports $6000 as income on his return, he can claim $4000 of qualified expenses.

* A student, under age 24, is only eligible for the refundable portion of the American Opportunity Credit if he supports himself by working. You cannot be supporting yourself on parental support, 529 plans or student loans & grants.   It is usually best if the parent claims that credit. 

You cannot claim a credit if you are, or can be, claimed as a dependent by someone else.


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2 Replies
Carl
Level 15

Can i receive a refund if for the year of 2018 I was a full time student and received pell grants to pay for education ?I was enrolled in a one year certificate program.

Being a student and/or receiving grants has nothing to do with you receiving a refund or not. First, you must have "earned" income that taxes were withheld on. Then if the taxes withheld exceed your tax liability, the difference will be refunded to you. Otherwise if taxes withheld are below your tax liability then you will owe the IRS money at tax filing time.
As for being a student, it depends on your age, if you were a full time student or not, if you provided more than half of your own support, if your parents qualify to claim you as a dependent on their tax returns, and a fair number of other things.
One thing though, is that if your grants were not used for "qualified" education expenses, then it's perfectly possible that grant money will be taxable income to you. It just depends on to many factors to list here.
Hal_Al
Level 15

Can i receive a refund if for the year of 2018 I was a full time student and received pell grants to pay for education ?I was enrolled in a one year certificate program.

Yes, possibly, if you are over age 23*.

There is a tax “loophole” available. The student reports all his scholarship, up to the amount needed to claim the American opportunity credit, as income on his return. That way, he can claim the tuition credit on his return. He can do this because that much tuition was no longer paid by "tax free" scholarship.  You cannot do this if the school’s billing statement specifically shows the scholarships being applied to tuition or if the conditions of the grant are that it be used to pay for qualified expenses.

Using an example: Student has $10,000 Pell Grant in box 5 of the 1098-T and $8000 in box 2. At first glance he/she has $2000 of taxable income and  can not claim the American opportunity credit. But if he reports $6000 as income on his return, he can claim $4000 of qualified expenses.

* A student, under age 24, is only eligible for the refundable portion of the American Opportunity Credit if he supports himself by working. You cannot be supporting yourself on parental support, 529 plans or student loans & grants.   It is usually best if the parent claims that credit. 

You cannot claim a credit if you are, or can be, claimed as a dependent by someone else.


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